The gross rent multiplier (GRM) is the property's price divided by its gross annual rental income. It is the bluntest screening tool in rentals: it ignores every expense, which makes it fast and wrong in a predictable direction. Investors use it to compare similar properties in the same market at a glance — the lower the GRM, the more rent each dollar of price buys — and then discard it in favor of NOI-based analysis for any real decision.
The formula / structureGRM = Price ÷ Gross Annual Rent
Gross Rent Multiplier: a worked example
Worked example. A property priced at $240,000 rents for $1,900/mo — $22,800 a year. GRM = $240,000 ÷ $22,800 = 10.5. A comparable property at $225,000 renting for $1,850/mo ($22,200/yr) has a GRM of 10.1 — slightly more rent per dollar of price, before expenses enter the picture.
What affects Gross Rent Multiplier
- Rent level relative to price in that specific market
- Nothing about expenses — two properties with equal GRMs can have wildly different taxes and upkeep
- Property class norms (GRM ranges differ for single-family vs. small multifamily)
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