Rental Math
Know what a property really earns.

Gross Rent Multiplier Calculator

Calculate a property's gross rent multiplier (GRM) from price and rent, see the rent a target GRM requires, and screen deals in seconds.

Published:

Updated:

Quick Answer

Gross Rent Multiplier Calculator estimates gross rent multiplier (grm) of 9.80 and gross annual rent of $40,800 for this scenario.

Key Takeaways

  • Gross Rent Multiplier Calculator estimates gross rent multiplier (grm) of 9.80 and gross annual rent of $40,800 for this scenario.
  • The gross rent multiplier divides the price by the gross annual rent: $400,000 ÷ $40,800 = 9.80. In plain terms, at the current rent it takes about 9.8 years of gross rent to equal the purchase price — before any expenses, which is exactly why GRM is a screening tool rather than a verdict.
  • Lower means rent is cheaper relative to price. Many cash-flow investors screen for a GRM under 8–10, while expensive coastal markets routinely trade at 15–20. There is no universal 'good' — compare within the same market. This property works out to 9.80.

Calculation Output

Gross Rent Multiplier (GRM)

9.80

Gross Annual Rent

$40,800

Rent-to-Price Ratio (monthly)

0.85%

Monthly Rent Needed for Target GRM

$3,333

Value This Rent Supports at Target GRM

$408,000

Result Chart

Gross Rent Multiplier (GRM)

9.80

Gross Annual Rent

$40,800

Rent-to-Price Ratio (monthly)

0.85%

Monthly Rent Needed for Target GRM

$3,333

Value This Rent Supports at Target GRM

$408,000

Key Facts

Gross Rent Multiplier (GRM)9.80
Gross Annual Rent$40,800
Rent-to-Price Ratio (monthly)0.85%
Monthly Rent Needed for Target GRM$3,333
Value This Rent Supports at Target GRM$408,000

How This Estimate Works

  • The gross rent multiplier divides the price by the gross annual rent: $400,000 ÷ $40,800 = 9.80. In plain terms, at the current rent it takes about 9.8 years of gross rent to equal the purchase price — before any expenses, which is exactly why GRM is a screening tool rather than a verdict.
  • This property's GRM sits between 8 and 12 — the typical middle range, where the quick screen says 'plausible' and the real answer depends on taxes, insurance, and condition.
  • The monthly rent-to-price ratio is 0.85% — the same relationship the 1% rule tests, where 1.00% or more is considered strong for cash flow. To hit a GRM of 10 at this price, the property would need to rent for about $3,333 a month; working the other way, today's rent supports a price of roughly $408,000 at that GRM.
  • Use GRM to compare properties in the same market quickly, then hand the survivors to a full analysis — cap rate for income after expenses, cash flow and DSCR once financing enters the picture. GRM treats a dollar of rent in a low-tax, low-insurance area as identical to one in an expensive market, and your bank account will not.

FAQ

What is a good gross rent multiplier?

Lower means rent is cheaper relative to price. Many cash-flow investors screen for a GRM under 8–10, while expensive coastal markets routinely trade at 15–20. There is no universal 'good' — compare within the same market. This property works out to 9.80.

How is GRM different from cap rate?

GRM uses gross rent and ignores every expense; cap rate uses net operating income after vacancy and operating costs. GRM is faster and fine for a first screen, cap rate is the honest number for comparing finalists. A low GRM with brutal taxes or insurance can still be a worse deal than a higher-GRM property with cheap costs.

What rent do I need for a GRM of 10?

Divide the price by the target GRM, then by 12. On this property that is $3,333 per month. If market rent is well below that figure, the price only works at a higher GRM — which the market may happily pay, but your cash flow will feel it.

Does GRM work for multi-unit and commercial property?

Yes — GRM was popularized on small multifamily and works anywhere you have a price and a gross rent roll. It gets shakier as properties get more different from each other (mixed unit sizes, master-metered utilities, below-market leases), which is when to graduate to cap rate and a full expense review.

More Scenarios

Related Tools