Townhouse

A townhouse is a multi-floor home that shares one or both side walls with neighboring homes. Many townhouses sit in communities with a homeowners association. When they are rented, the gross rent multiplier compares them easily with single-family homes on rent and price, but not on expenses.

The HOA dues are the difference. A townhouse and a detached house at the same price and rent have the same GRM, but the townhouse owner pays monthly dues out of that rent. Depending on what the association covers, some of that cost may be offset by exterior maintenance or insurance the owner no longer pays directly.

Check the HOA's rental rules before relying on any GRM. Some associations cap the number of rented units, require minimum lease terms or ban rentals entirely. A townhouse that cannot be rented has no GRM to speak of.

Further reading: Townhouse on Wikipedia.