Gross Rent Multiplier (GRM)
The gross rent multiplier is price divided by gross annual rent — a fast screening ratio that ignores expenses, best used to cross-check the cap rate.
Gross rent multiplier (GRM) is the purchase price divided by the property's gross annual rent. A $2,000,000 building renting for $250,000 a year carries a GRM of 8.
How it's used: GRM is a back-of-the-envelope screen, common on small residential and quick deal triage. Because it uses gross rent rather than NOI, you can compute it in seconds from a listing before you have an expense breakdown.
Why it matters: GRM's speed is also its weakness — it completely ignores operating expenses, vacancy, and capital costs, so two buildings with identical GRMs can have very different real yields. Treat it as a first filter, then confirm with the cap rate, which is built on actual NOI. A GRM that looks cheap but a cap rate that looks thin usually means a high expense load.
Formula: GRM = Purchase price ÷ Gross annual rent
For a per-door or per-foot basis check, pair it with price per unit and effective gross income. Run the real yield on the cap rate calculator.
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