How to Calculate Gross Rent Multiplier Calc
What is Gross Rent Multiplier Calc?
Calculates gross rent multiplier (GRM) comparing purchase price to annual rental income. Quick valuation metric.
Formula
GRM = Purchase Price ÷ Gross Annual Rental Income
- GRM
- rough cap rate — rough cap rate
Step-by-Step Guide
- 1GRM = Purchase Price ÷ Gross Annual Rental Income
- 2Lower GRM = better value (lower price relative to income)
- 3Typical range 4-7; varies by market
- 4Quick estimate: 1 ÷ GRM = rough cap rate
Worked Examples
Input
Price $300k, rent $2k
Result
GRM 150
Common Mistakes to Avoid
- ✕Using annual income instead of monthly (must multiply)
- ✕Comparing across markets with different expenses
- ✕Using for expense-heavy properties
Frequently Asked Questions
Is GRM the same as cap rate?
No; GRM uses gross income (doesn't account for expenses); cap rate uses NOI (accounts for expenses).
When should I use GRM vs. cap rate?
GRM: quick comparison, residential; cap rate: accurate analysis, accounting for expenses.