CAP Rate and GRM are both measurements for the value of a rental investment. CAP Rate should be above six or seven percent.
If the CAP rate is the same or less than the savings interest rate at a bank, pick a different property, or put your money in the bank…. it has less risk.
The GRM should be ideally be below 100.
Now here is an example of these calculations. We will use a sample property priced at $100,000, Gross Scheduled Income of $10,000, Other Income of $1,000, a 10% vacancy allowance, and $5,000 operating expenses.
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