Tools › Gross Rent Multiplier
Free Tool

Gross rent multiplier calculator.

GRM is the quick-and-dirty screen: price divided by gross annual rent. It ignores expenses, so it’s no substitute for a cap rate — but it’s a fast first filter to compare listings. Enter any two; get the third.

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Gross rent multiplier
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GRM = price ÷ gross annual rental income. It uses gross rent, not NOI, so it ignores vacancy and operating expenses — two properties with the same GRM can have very different true returns. Use it to screen and rank quickly, then confirm the winners with a cap rate and full underwriting.

Where GRM helps and where it fails

The gross rent multiplier is the fastest way to rank commercial listings: price divided by gross annual rent. A lower GRM means you are paying less for each dollar of rent. Its virtue is speed and its flaw is that it ignores vacancy and operating expenses entirely — so it is a screening tool, not a substitute for a cap rate.

Example. A property priced at $2,300,000 collecting $210,000 in gross rent has a GRM of about 11. A comparable listing at the same price collecting $240,000 has a GRM of 9.6 — cheaper relative to its rent, and worth a closer look. But confirm with a cap rate before deciding: the higher-rent building might simply carry higher expenses.

Frequently asked questions

What is gross rent multiplier (GRM)?
GRM is a property’s price divided by its gross annual rental income. A $2.3M property collecting $210,000 in gross rent has a GRM of about 11. It’s a fast screening ratio — the lower the GRM, the cheaper the property relative to its gross rent.
What is a good GRM?
There’s no universal number — it depends on asset type, expenses, and market. Lower is generally better for a buyer, but a low GRM can hide high operating costs or vacancy. Because GRM ignores expenses, always confirm with a cap rate before drawing conclusions.
GRM vs cap rate — which should I use?
Use GRM for a 10-second first screen and cap rate for real analysis. GRM uses gross rent and ignores expenses; cap rate uses NOI (income after operating expenses) and reflects the property’s true unlevered yield. GRM ranks; cap rate decides.

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Estimates are for planning only and use simplified assumptions — not tax, legal, or investment advice. Verify with your lender, CPA, and a full broker analysis before acting.