The gross rent multiplier is price divided by annual gross rent — a fast screening ratio for income properties. A lower GRM generally means a better price relative to rent.
The example
$600k price, $75k annual rent.
| A | B | |
|---|---|---|
| 1 | Item | Value |
| 2 | Price | 600000 |
| 3 | Annual rent | 75000 → 8.0 |
The formula
The formula:
How it works
How it works:
price / annual_gross_rentgives the GRM — how many years of gross rent the price represents.- It uses gross rent (no expenses), so it’s a quick screen, not a full analysis.
- Flip it to estimate value:
value = annual_rent × market_GRM. - A monthly GRM variant divides price by monthly rent — just be consistent.
GRM vs cap rate: GRM is faster (no expense data needed) but cruder — it ignores operating costs, so two properties with the same GRM can have very different NOI. Use GRM to screen a list quickly, then cap rate and cash-on-cash for the shortlist.
Try it: interactive demo
Price and annual gross rent.
Variations
Value from GRM
Estimate price:
Monthly GRM
Using monthly rent:
Implied rent
Rent at a target GRM:
Pitfalls & errors
Gross, not net. GRM ignores expenses — it’s a screen, not a substitute for cap rate.
Annual vs monthly. An annual GRM (~8) and a monthly GRM (~96) are very different numbers — label which.
Lower is cheaper. A high GRM means you pay more per dollar of rent.
Practice workbook
Frequently asked questions
How do I calculate gross rent multiplier in Excel?
How do I estimate value from GRM?
Is GRM better than cap rate?
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