What is the gross rent multiplier?
The gross rent multiplier (GRM) is a quick screening tool that relates a property's price to the gross rent it produces. It is a fast first-pass filter before deeper analysis.
The formula
GRM = Property price / Annual gross rent
The result is a multiple. A lower GRM means the property is cheaper relative to the rent it produces — which is generally more attractive, all else equal.
How to use it
- Enter the property price.
- Enter the annual gross rent.
For example, a $500,000 property producing $50,000 in annual gross rent has a GRM of 10.0.
Strengths and limits
GRM is fast and needs only two inputs, which makes it great for screening many listings. But it ignores operating expenses, vacancy, and financing — so once a property passes the GRM screen, move on to cap rate, NOI, and cash flow before committing.