Gross Rent Multiplier Calculator
GRM is the fastest screen in rental investing: price ÷ annual gross rent. Enter two numbers and you have a figure you can compare across every listing on your shortlist.
Gross rent multiplier
What this GRM means
The band most US single-family and small-multifamily rentals trade in.
GRM uses gross rent, so it ignores property taxes, insurance, management, maintenance and vacancy entirely. Two properties with the same GRM can have very different cash flow. Use it to rank a list quickly, then run the ones that survive through a full analysis.
The gross rent multiplier formula
GRM = Purchase price ÷ (Monthly rent × 12)A $300,000 property renting at $2,500 a month collects $30,000 in gross rent a year, so its GRM is 300,000 ÷ 30,000 = 10. Read that as "the price is ten years of gross rent." Invert it and you have the gross yield — a GRM of 10 is a 10% gross yield, a GRM of 20 is 5%.
Nothing else enters the formula. No vacancy, no taxes, no insurance, no mortgage. That is deliberate: you can compute GRM for a listing the moment you see its price and rent, which is exactly when you need to decide whether it's worth more of your time.
GRM by price and rent
Where a deal lands, at a glance. Find your price down the left, your monthly rent across the top.
| Purchase price | $1,200/mo | $1,500/mo | $2,000/mo | $2,500/mo | $3,000/mo |
|---|---|---|---|---|---|
| $150,000 | 10.4 | 8.3 | 6.3 | 5.0 | 4.2 |
| $200,000 | 13.9 | 11.1 | 8.3 | 6.7 | 5.6 |
| $250,000 | 17.4 | 13.9 | 10.4 | 8.3 | 6.9 |
| $300,000 | 20.8 | 16.7 | 12.5 | 10.0 | 8.3 |
| $400,000 | 27.8 | 22.2 | 16.7 | 13.3 | 11.1 |
Most US single-family and small-multifamily rentals sit between about 7 and 10. Treat those bands as orientation, not a target — GRM varies enough between markets that the only comparison that really means anything is against similar properties nearby.
Where GRM misleads
Because GRM stops at gross rent, every cost that varies between properties is invisible to it. Two houses at a GRM of 9 are not equivalent if one carries a $6,000 tax bill and the other $2,400, or if one is a turnkey rental and the other needs a roof. A high-tax state, an HOA, or owner-paid utilities can erase the advantage a lower GRM suggests.
It also says nothing about financing. Two investors buying the same property at the same GRM can have completely different cash flow depending on their rate and down payment.
So use GRM the way it was designed: to rank a long list fast. Then take the top few and run them through the cap rate calculator for an expense-aware comparison, or the full rental property calculator for cash flow, returns, and a buy/pass verdict.
Frequently asked questions
What is a gross rent multiplier?
Gross rent multiplier (GRM) is a property's price divided by its annual gross rental income. A $300,000 property renting for $2,500 a month collects $30,000 a year, so its GRM is 10 — the price equals ten years of gross rent. It's the fastest way to compare properties before you have an operating statement for any of them.
How do you calculate gross rent multiplier?
Multiply the monthly rent by 12 to get annual gross rent, then divide the purchase price by that figure. Price ÷ (monthly rent × 12) = GRM. A $235,000 property renting at $2,400/month has $28,800 of annual gross rent and a GRM of about 8.2. No expenses enter the calculation at all.
What is a good gross rent multiplier?
Most US single-family and small-multifamily rentals trade between about 7 and 10. Below 7 is cheap relative to rent, which often accompanies higher-risk or slower-growth markets. Above 12–14 is common in expensive appreciating metros where buyers accept weak rent yields in exchange for growth. Because GRM varies so much by market, the useful comparison is against nearby comparable properties rather than a national number.
Is a higher or lower GRM better?
Lower is better for the buyer, all else equal — you're paying fewer years of rent for the same property. But all else is rarely equal. A low GRM can reflect a weak rental market, deferred maintenance, or high property taxes that gross rent doesn't capture. Treat a low GRM as a prompt to look closer, not as proof of a bargain.
What's the difference between GRM and cap rate?
GRM uses gross rent and ignores every expense; cap rate uses net operating income, which subtracts vacancy and operating costs. That makes GRM faster but cruder. Two properties can share a GRM of 9 while one has a 7% cap rate and the other 4%, because their taxes, insurance, and management differ. GRM screens a list; cap rate compares the survivors.
Does GRM include expenses or the mortgage?
Neither. GRM is built from gross scheduled rent and the purchase price only — no vacancy, no operating expenses, no financing. That's its whole design: it's comparable across properties before you know any of those numbers, which is also why it should never be the last metric you look at.