As a real estate investor, you probably are already acquainted with a term used frequently in real estate investing circles called Gross Rent Multiplier, or GRM. If not, please read on and discover what gross rent multiplier is and how to calculate it.

Gross rent multiplier, or GRM, is a ratio between the price and gross scheduled income of a property that essentially tells the investor the property price based upon each $1 of annual gross possible income.

A GRM of 6.0, for instance, indicates the rental property price is six times the gross scheduled income. That is, the property would have to collect the income based upon current rents (as if all units were totally occupied) for six years to total the price. As a result, the higher the GRM is, the less income there is compared to the price, and thus more years are required to collect it; and vice versa.

How to Calculate GRM
Gross Rent Multiplier = Sale Price / Gross Scheduled Income

Gross rent multiplier is not a particularly powerful measurement and is best used as a precursor to a serious income property analysis. GRM is essentially a rule of thumb measurement that does offer real estate agents and investors a quick method to do a preliminary survey for real estate investing purposes; GRM has the advantage of being a very easy ratio to calculate…read the entire article

If you own rental property, you have to deal with tenants. Or should I say, you most certainly hope to deal with tenants. The last thing any real estate investor wants is an empty apartment, office, retail, or warehouse.

Okay, so what is a holdover tenant? A holdover tenant is one who remains in your rental property after the original lease period expires. And in most cases, once the lease expires, the tenant remains in the property either with, or without your permission.

Holdover Tenants (Mutual Agreement)

In some cases, leases for holdover tenants automati­cally renew for the same period as the original lease and in other instances, the lease converts to a month-to-month tenancy.

Unless your rental properties are located in an area with strong peak and valley rental seasons such as college towns and vacation areas, you should consider leases that convert to month-to-month tenancies. Month­-to-month holdover tenants often end up staying for years. But even if they stay for only two to six additional months, you still gain because you’ve at least postponed your turnover. If, however, you require your tenants to commit for another year, you may precipitate a move that would other­wise have been delayed through procrastination.

Holdover Tenants (without Permission)

When tenants don’t move on schedule when their tenancy ends, you may encounter tenants who decide to hold over without permission. To reduce this possibility, and compensate for any problems this delay you should place a penalty clause in your lease for unauthorized holdovers.

By Patrick Riddle

1) Fire Up Your Marketing Plan

You cannot reasonably expect to explode your investing business without putting some serious attention to your marketing strategy. If you don’t have leads coming in at all or don’t have as many as you would like, how else do you plan on getting the phone ringing? MARKETING! And you might as well go ahead and decide to accept that marketing is an investment, NOT AN EXPENSE.

If you are saying to yourself, “I don’t have money to invest in marketing, I’m broke.” Well, there are plenty of Low-to-No cost marketing techniques out there. Your willingness to do them is the only question at hand. A few examples would be direct mail, knocking on preforeclosure doors, networking with wholesalers, and bandit signs. If you already have 30 to 50 leads coming in per month, you’re going to need to either invest more money into your marketing system or add a new strategy. Either way, you’ve got to take the next step. And remember, the key to marketing is Test, Test, Test!

2) Sharpen Your Negotiating and Sales Skills

Whether you like it or not, you are a salesman. If you don’t like the sound of that, assign another mental representation to what you think of when you think of a salesman. Everyone is in sales whether they admit it or not. As an investor, you are going to be selling contractors, investors, buyers, sellers, attorneys, accountants, and possibly employees just to name a few, on your ideas every single day!

If there was a master skill to success as a real estate investor, I think that it would be to become an excellent communicator. That is really all negotiating and sales is…communication. So my question to you is, “What have you done lately to improve your negotiating and sales skills.” What have you read, what have you heard, and what have you tried lately to improve upon your ability to sell effectively. A great book that is an easy read is Zig Ziglar’s Selling 101. Also, Peter Conti and David Finkel’s books are a goldmine for good scripts for negotiating. You may not even realize how powerful they are until you study the subject in depth.

My recommendation to you is to find a good mentor, and simply do what he or she says. A natural tendency is to do things your own way just like it’s a natural tendency to stay in your comfort zone. Take an expert’s advice and once you master it, then tweak your strategy to best suit your particular style.

3) Get a Laser Focus on the Numbers

What I mean by that is, “know your bottom line in every deal you do, know which marketing strategy(s) is bringing the best results, keep your eye on what you’ve paid your contractors, watch the time tables and budgets for your projects and make sure they are staying on track.” And I say this all from experience!

I’ve thought I knew exactly where we were in a deal and then to my dismay, totaled up the numbers, and WHAM, we only made half the profit we were supposed to! Last fall, we had 5 or 6 renovations going on at one point and extended money to one of our contractors that never completed the work. I didn’t realize we were paying him for work yet to be completed, and now I’m having to file judgments against him, probably end up in court, and waste a lot of time! They say you can’t manage what you don’t measure, and I will attest to that! The closer you pay attention to the details, the more money you’re liable to make.

By firing up your marketing plan, leads will be pouring in from all directions. By honing and perfecting your negotiating skills, your closing ratio will dramatically increase. Coupled with having an avalanche of leads, you’ll be on your way.

BUT, don’t forget to keep a watchful eye on the numbers. Remember, you can’t manage what you don’t measure. And if you want to manage to explode your real estate investing business, you’ve got to measure your successes

About the Author

Patrick Riddle has done over 100 deals since he started investing just 5 years ago. He is considered an expert in creative real estate investing techniques, lease options, short sales, and recruiting private money. He has raised over $6,000,000 in cash from private investors for his company.

Being a teacher at heart, he enjoys writing for his blog, http://www.MustKnowInvesting.com, The “Best Darn” Creative Real Estate Investing Blog on the Planet.