Gross rent multiplier calculator
The gross rent multiplier (GRM) is a quick way to size up an income property: the price divided by the yearly gross rent. A GRM of 11 means the price is eleven years of gross rent. This gross rent multiplier calculator finds the GRM from price and rent, the price you can pay for a target GRM, or the rent a property must earn to hit it.
It also shows the matching gross yield and an implied cap rate, so you can see the “gross rent multiplier vs cap rate” difference for yourself, and it estimates a value from up to three comparable properties. GRM ignores vacancy and costs, so it is a screening tool, not a full valuation.
How to use the Gross Rent Multiplier Calculator
- Choose Find GRM, Find price or Find rent, and your Country.
- Enter the Property price and the Gross rent, per month or per year; for the other modes enter a Target GRM.
- Optionally set vacancy and the operating expense ratio to see the implied cap rate.
- Add up to three comparable properties to get an average GRM and a value estimate.
Gross Rent Multiplier Calculator features
Three directions
GRM from price and rent, price from a GRM, or the rent needed for a GRM.
Monthly or yearly rent
Switch the rent period; UAE examples use yearly rent.
Cap rate bridge
An implied cap rate shows what the GRM becomes after vacancy and costs.
Value from comps
Average the GRM of similar properties and apply it to your rent.
GRM table
See the price your rent supports at GRMs from 8 to 25.
GRM formula and worked example
GRM = property price ÷ annual gross rent. Rearranged, Price = GRM × annual gross rent and Annual gross rent = price ÷ GRM. The reciprocal, 1 ÷ GRM, is the gross yield.
Example: a $400,000 duplex that rents for $3,000 a month earns $36,000 a year, so the GRM is 11.11 and the gross yield is 9%. If similar properties sell at a GRM of 10, this rent supports a price of $360,000; to justify $400,000 at a GRM of 10 it would need to rent for $3,333 a month.
Three comparables priced $360,000, $420,000 and $388,000 with monthly rents of $2,850, $3,300 and $2,940 have GRMs of 10.53, 10.61 and 11.00, an average of 10.71. Applied to $36,000 of rent, that suggests a value near $385,561.
| Measure | Formula | Example |
|---|---|---|
| Gross rent multiplier | Price ÷ yearly gross rent | 11.11 |
| Gross yield | 1 ÷ GRM | 9.00% |
| Cap rate | NOI ÷ price | 5.13% |
| Price at GRM 10 | GRM × yearly rent | $360,000 |
GRM versus cap rate
GRM uses gross rent, so two buildings with the same GRM can have very different profit if one has high taxes, repairs or vacancy. The cap rate divides net operating income by price and captures those costs, which is why valuers prefer it. Use GRM to shortlist properties that look cheap for their rent, then run the cap rate calculator on the survivors.
- Compare GRMs only between similar properties in the same area and rent type.
- A lower GRM means a cheaper price for the rent, but may signal higher costs or risk.
- Use the rental yield calculator for gross and net yield, and the cash flow calculator once you have a loan.
Gross Rent Multiplier Calculator FAQ
How do you calculate the gross rent multiplier?
Divide the property price by the annual gross rent. A $400,000 property earning $36,000 a year has a GRM of 11.11.
What is a good gross rent multiplier?
There is no universal figure. Lower is cheaper for its rent, but it must be judged against comparable properties nearby. Many US small-property investors look at roughly 8 to 12.
What is the difference between GRM and cap rate?
GRM uses gross rent and ignores expenses; cap rate uses net operating income. The same GRM can hide very different cap rates, so GRM is only a first screen.
How do I find a property value using GRM?
Multiply the average GRM of comparable properties by the subject property’s annual gross rent. The comparables section here does this for up to three properties.
Is GRM the same as the price-to-rent ratio?
They are the same idea: price divided by yearly rent. GRM is the term used for investment property.
Is this valuation advice?
No. It is a screening calculation from the figures you enter. Get a professional valuation and check costs before you buy.