When selling to landlord buyers, you need different metrics: GRM, cap rate, and the 1% rule matter more than ARV.
Monthly Rent ≥ 1% of Purchase Price
Passes 1% Rule:
$120,000 price × 1% = $1,200/month rent needed
Actual rent: $1,300/month ✓
Fails 1% Rule:
$200,000 price × 1% = $2,000/month rent needed
Actual rent: $1,400/month ✗
GRM = Purchase Price ÷ Annual Rent
Lower GRM = Better cash flow potential
Example: $120,000 ÷ ($1,200 × 12) = GRM of 8.3 (Good!)
Cap Rate = (NOI ÷ Purchase Price) × 100
NOI = Annual Rent - Operating Expenses (taxes, insurance, maintenance, vacancy)
Landlord buyers care about cash flow, not ARV. When marketing to landlords, lead with: monthly rent, cap rate, and GRM. These numbers sell rental properties.
When selling to landlord buyers, ARV isn't everything. Learn the metrics that matter: GRM, cap rate, and the 1% rule.
Monthly Rent ≥ 1% of Purchase Price
✓ Passes 1% Rule
$150,000 price → $1,500/mo rent
Good cash flow potential
✗ Fails 1% Rule
$200,000 price → $1,400/mo rent
May not cash flow well
GRM = Price ÷ Annual Rent
Lower GRM = Better deal for landlords
Under 8
Excellent
8-10
Good
Over 10
Weak
Example: $120,000 price ÷ ($1,200/mo × 12) = GRM of 8.3
Cap Rate = NOI ÷ Price × 100
NOI = Annual Rent - Operating Expenses (taxes, insurance, maintenance, vacancy)
Higher cap rate = Better return for landlords
Under 6%
Low yield
6-8%
Average
8%+
Strong
Example: $14,400 annual rent - $4,400 expenses = $10,000 NOI
$10,000 ÷ $120,000 × 100 = 8.3% Cap Rate
When your buyer is a landlord, lead with rental numbers. "This property rents for $1,400/mo at a 9% cap rate" is more compelling to them than "ARV is $180K."