RVP UnderwriterMetrics
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
Underwriting a specific property?
Step by step, line by line: how to underwrite an RV park or campground, a mobile home park, or a self storage facility. Every one starts the same way: rebuild the seller's NOI.
Part of the RVP Underwriter glossary of income-property underwriting terms. Browse all definitions, or put them to work with the free calculators.