What Is GRM (Gross Rent Multiplier) in Real Estate?

The Gross Rent Multiplier (GRM) is a simple real estate valuation tool that compares a property's price to its gross rental income. Investors use GRM to quickly estimate whether a rental property is overpriced or a potential good deal—without needing full expense details.

How GRM Works

GRM gives investors a fast, high-level way to compare rental properties. A lower GRM typically suggests a stronger income-to-price relationship, while a higher GRM indicates a property may be priced aggressively relative to the rent it generates.

  • Used to compare rental property values
  • Does not include operating expenses (unlike cap rate)
  • Helps investors screen good vs. weak rental deals
  • Common in residential and small multifamily investing

GRM Formula

GRM = Property Price ÷ Gross Annual Rent

Because GRM uses gross rental income rather than net income, it is best used as a screening tool—not a complete valuation method.

Example of GRM

If a property is listed for $300,000 and generates $24,000 in gross annual rent:

GRM = $300,000 ÷ $24,000 = 12.5

That means the property's price is 12.5 times its yearly rental income. Investors would compare this GRM to similar properties to judge whether it's competitively priced.

GRM vs. Cap Rate

  • GRM uses gross rent only and ignores operating expenses.
  • Cap rate uses NOI (net income), making it more accurate for valuation.
  • GRM is faster for screening; cap rate is better for final investment analysis.
  • Both are common tools in rental and multifamily investing.

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