Gross Rent Multiplier (GRM)
A quick valuation metric: purchase price divided by gross annual rents.
Definition
Gross Rent Multiplier (GRM) = Purchase Price ÷ Gross Annual Rent. It's a quick screening metric to compare similar rental properties without doing full financial analysis. A property priced at $200,000 that rents for $20,000/year has a GRM of 10.
Lower GRM = more affordable relative to its rent income. Markets with high price appreciation tend to have high GRMs (15–25+). High-yield secondary markets typically have lower GRMs (6–10). GRM varies widely by location, property type, and quality.
GRM is a fast filter — it doesn't account for expenses, vacancy, or financing. Use it to quickly eliminate properties that are clearly overpriced relative to rental income before spending time on full underwriting. Follow up any GRM screen with NOI and cap rate analysis.
Related Terms
Cap Rate
Capitalization rate — the ratio of a property's net operating income to its market value.
Net Operating Income (NOI)
A property's total income minus all operating expenses, before mortgage payments and taxes.
Cash Flow
The money left over each month after all property-related income and expenses are accounted for.
Buy-and-Hold
An investment strategy of purchasing property and holding it long-term for rental income and appreciation.