Gross Rent Multiplier (GRM) Calculator

Calculate GRM and rental yield to quickly evaluate rental property investments.

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Gross Rent Multiplier Formulas: Gross Annual Rent = Monthly Rent * 12 Effective Annual Rent = Gross Annual Rent * (1 - Vacancy Rate) GRM (Gross Rent Multiplier): GRM = Property Price / Gross Annual Rent Effective GRM: Effective GRM = Property Price / Effective Annual Rent Gross Rental Yield: Yield = (Gross Annual Rent / Property Price) * 100 Effective Rental Yield: Effective Yield = (Effective Annual Rent / Property Price) * 100 Note: Lower GRM = Better value; Higher Yield = Better return
Example: Property Price: $300,000 Monthly Rent: $2,000 Vacancy Rate: 5% Gross Annual Rent = $2,000 * 12 = $24,000 Effective Annual Rent = $24,000 * 0.95 = $22,800 GRM = $300,000 / $24,000 = 12.5 Effective GRM = $300,000 / $22,800 = 13.16 Gross Yield = ($24,000 / $300,000) * 100 = 8% Effective Yield = ($22,800 / $300,000) * 100 = 7.6% Interpretation: Property costs 12.5 times annual rent. Gross yield is 8%.

What is Gross Rent Multiplier (GRM)?

GRM is a real estate metric that measures the ratio of property price to gross annual rental income. It's a quick screening tool to compare rental properties. Lower GRM generally indicates better value.

How do you interpret GRM?

GRM shows how many years of gross rent equal the purchase price. GRM of 10 means the property costs 10 times its annual rent. Lower is typically better, but varies by market. Most markets: 4-12 is normal.

GRM vs Cap Rate - which is better?

GRM is simpler (uses gross income only) but less accurate. Cap rate uses net operating income and accounts for expenses. GRM is good for quick screening; cap rate for detailed analysis.

What is a good GRM?

Varies by market. Urban areas: 15-20, suburban: 8-12, rural: 4-7. Lower GRM suggests better cash flow potential. Compare to local market averages and similar properties.

Can I use GRM to estimate property value?

Yes. Estimated Value = Gross Annual Rent * Market GRM. Useful for quick valuations, but should be confirmed with cap rate, comparable sales, and cash flow analysis.