Metrics
What Is the Gross Rent Multiplier (GRM)?
The gross rent multiplier expresses a property's price as a multiple of its gross annual rent. It is a fast first screen that ignores expenses entirely.
Gross rent multiplier = Price ÷ Gross annual rental income
A $3,500,000 park with $600,000 of gross income has a 5.8x GRM. As a rough benchmark, a GRM above 10 is expensive. Because it ignores expenses, GRM treats a lean property and a costly one the same at the same rent, so use it to sort the inbox, then move to cap rate on a real NOI. It is closely tied to the 1% rule: a 100x monthly GRM equals 1%.
Compute it, color-coded, on the GRM calculator.
See it on a real deal
RVP Underwriter computes this from your documents automatically, with every figure shown and sourced. Underwrite a deal free.
Questions
GRM vs cap rate, what is the difference?
GRM uses gross income and ignores expenses; cap rate uses net operating income after expenses. GRM is faster but cruder, cap rate is the number to trust for an offer.
Related terms
Part of the RVP Underwriter glossary of income-property underwriting terms. Browse all definitions, or put them to work with the free calculators.