Gross rent multiplier is an often-used quick gage of what a property's market value might be. The problem with it is that it does not account for the many variables that need to be addressed for a good valuation. It also can only be used by an informed investor who knows what multiplying factor to use in various neighborhoods or markets. All this being said, what it is, is the annual gross rental income multiplied by an average multiplier for the area to estimate market value.

Example: A typical duplex in west Toledo with 2 bedroom units, rents for an average of $500.00 per unit per month, or a total of $1000.00 per month, which is $12,000.00 per year gross rent. If the accepted gross rent multiplier for the area is seven, then the duplex would be worth about $84,000.00. Of course the astute investor would be adjusting for many things from that point, but it gives him or her a quick ballpark value. In the Toledo area, gross rent multipliers can vary from 4 to 8 depending on the area. Many times an under rented property is undervalued by using this method.