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Gross rent multiplier calculator

Find the gross rent multiplier (GRM) of a rental property: its price divided by a year of gross rent. Enter the price, the monthly rent and any other income, and the multiplier you are willing to pay. The results show the GRM, the price your target supports and the rent the price needs to meet it.

Parking, storage, laundry or pet rent. Enter 0 to use rent alone.

The multiplier you are willing to pay, from similar rentals that sold nearby.

Your results

Estimate

Gross rent multiplier: 10.71x

Gross rent multiplierGross rent multiplier of 10.71x against your target of 10.00x, on a scale from 0x to 20x: a price of $360,000 over annual gross rent of $33,600.GRM10.71xYour target 10.00x0x20x
Annual gross rent
$33,600.00
Gross yield (annual rent / price)
9.33%
Price at your target GRM
$336,000.00
Monthly rent needed for your target GRM
$3,000.00
  • The multiplier is above your target. At 10.00x, this rent supports a price of $336,000.00.
  • GRM leaves out vacancy and operating expenses. Check the cap rate and cash flow before you make an offer.

Results are estimates for planning only. They are not legal, tax or investment advice, and they apply no state or local rules. Check your lease, your local laws and a qualified professional before you rely on a number.

How the gross rent multiplier is calculated

GRM = price / annual gross rent; price at your target = target GRM x annual gross rent

Annual gross rent is the scheduled rent for every unit for a full year, plus other income such as parking, storage, laundry or pet rent. Nothing comes off it: vacancy and operating expenses stay out. The GRM divides the price by that figure, so a GRM of 10 means the price equals ten years of gross rent.

Real estate investors use GRM as a first screen. Work out the GRM of rentals like yours that sold nearby, then compare a listing against them: a lower GRM means you pay fewer years of rent for the property. Turned around, a GRM estimates a price: your target multiplier times the property's annual gross rent.

GRM leaves out vacancy, property taxes, insurance, repairs, owner-paid utilities and financing. Two buildings with the same rent and price can cost very different amounts to run, so a property that passes the GRM screen still needs a cap rate and a cash flow estimate before you make an offer.

Worked example

A duplex is listed at $360,000. Its two units rent for $2,750 a month together, and a shared laundry room brings in $50 a month. Similar rentals nearby sold at about 10 times their gross rent, so your target GRM is 10.

  1. Monthly gross rent: $2,750 + $50 = $2,800.
  2. Annual gross rent: $2,800 x 12 = $33,600.
  3. GRM: $360,000 / $33,600 = 10.71.
  4. Gross yield: $33,600 / $360,000 = 9.33%.
  5. Price at your target: 10 x $33,600 = $336,000.
  6. Rent the asking price needs at your target: $360,000 / 10 / 12 = $3,000 a month.

The gross rent multiplier is 10.71x. At your target of 10.00x, this rent supports a price of $336,000.00, and the asking price would need $3,000.00 a month of gross rent.

Frequently asked questions

What is a gross rent multiplier?

The gross rent multiplier (GRM) is a property's price divided by its annual gross rent: the rent for every unit for a year plus other income, before vacancy and expenses. It tells you how many years of gross rent the price represents.

What is a good gross rent multiplier?

It depends on the market and the property type, and it changes over time. A lower GRM means you pay fewer years of rent, which is better for a buyer if the property costs about the same to run. Compare a listing with the GRM of similar rentals that sold nearby, and check the cap rate before you rely on it.

What is the difference between GRM and cap rate?

GRM divides the price by gross rent. Cap rate divides net operating income, the rent left after vacancy and operating expenses, by the price. Two properties with the same GRM can have very different cap rates when one has higher taxes or pays the utilities, which is why cap rate is the better measure once you know the expenses.

Is GRM based on monthly or annual rent?

Most investors use annual rent, and this calculator does too. Some use monthly rent, which gives a number 12 times larger: the example duplex is $360,000 / $2,800 = 128.57 on monthly rent and 10.71 on annual rent. Check which one a listing or report means before you compare.

How do I find the GRM for my area?

Take recent sales of rentals like the one you are looking at, and divide each sale price by that property's annual gross rent. The middle of those figures is a fair target. A local agent or appraiser can help you find sales with known rents.

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