All about GRM's and Cap rates.

[Lawrence R.]

When developing a GRM/cap rate:

1. How many closed sales do you typically need to feel good about your rate?

2. Does anyone rely on an "industry set" cap rate? (regional think tank type thing)

3. How large of an area do you feel comfortable using to find your sales?

4. Are GRM's particularly useful for SFR's? Considering the overall market driving SFR pricing would still be Single Family, owner occupied?

Thoughts please...

 

[ZZGAMAZZ]

A long thread was conducted about 1 month ago concerning the application of GRM's. The OP was a female I think, who implied that the GRM included a circular valuation of sorts that tends to perpetuate itself. I apologize but I can't remember the date or the name of the thread. It was decided that GRM's are appropriate for multi-unit residential valuation. Hope this helps a bit.

 

[Elliott]

Don't do much capitalizing now a days, but when I did:


When developing a GRM/cap rate:

1. How many closed sales do you typically need to feel good about your rate?
As many as I could find.
2. Does anyone rely on an "industry set" cap rate? (regional think tank type thing)
Always interesting, but not determinant
3. How large of an area do you feel comfortable using to find your sales?
Unique subject, the neighborhood expands to find comparables
4. Are GRM's particularly useful for SFR's? Considering the overall market driving SFR pricing would still be Single Family, owner occupied?
No

 

[Bill_FL]

Eilliot hit it. GRM kind of implies residential, and I do not do very much of that.

I have subscriptions to several national and regional publications on income/expenses and cap rates. I use them a lot. When I develop market rents/expenses and cap rates from sales, this published data can be used to compare what you are finding. Does it all make sense together?

How far do I go? Depends. What is the market area for the property? Where would a typical buyer/investor for that type of property consider looking? That answer would be very different from a small downtown retail space to a regional mall.

 

[Lawrence R.]

Wow.

Thanks to the double super secret society of Certified Generals for Expelling Bill Potts from your group.


One CG to opine about something related to Commercial work.

you would think with as many CG's posting about residential, they would leap at the chance to talk about something in their own wheel house.

Thanks to all who posted, it was helpful.

(Pay no attention to the man behind the curtain....)