(1.) A figure used to express the estimated value of an income-generating property. The GRM is expressed as the ratio of the price of a piece of real estate investment to its annual rental income, prior to property taxes, insurance, utilities, and other expenses. 

(2.) Obtained by dividing the sale price of the property by the gross monthly rental.

Typically, investors typically want to see a GPM of no greater than 8. Meaning the properties value will be 8x the gross annual rent. Looking only at a properties GPM for investment purposes is short-sighted. Just because something rents for "x" one year doesn't mean that trend will continue.

Some other things to make sure to account for

1. How many new similar properties are going up in the area ?

2. Is the area's population increasing or decreasing ?

3. Does the property need repairs ?

4. What is the area's vacancy rate like? 

Bankapedia's Take

When it came to investment properties during the boom, GPM became a less important factor in a buying decision. Most investors intended to buy and hold the property for less than a year, flip it and make a quick profit. Often times, investors never considered renting the property, and therefore didn't look at things like GPM. Little did they know that fallout that awaited them around the corner. Most of these quick flip properties are now being rented or simply being abandoned and left to foreclose.