What is Gross Rent Multiplier (GRM)?
The short answer
Gross Rent Multiplier (GRM) is a property's price divided by its annual gross rental income. GRM = Price ÷ Annual Gross Rent. It's a quick, rough screening ratio — a lower GRM suggests a better price relative to rent — but unlike cap rate it ignores operating expenses and vacancy.
GRM vs. cap rate
GRM uses gross rent and is fast for a first-pass screen; cap rate uses NOI (net of operating expenses) and is the more accurate profitability measure. Use GRM to shortlist, cap rate to underwrite.
Gross Rent Multiplier (GRM) — FAQ
Is a lower GRM always better?
Not necessarily — a low GRM can reflect high expenses, deferred maintenance, or a weak market. Always confirm with NOI and a real expense review.
Related terms
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