Free GRM Calculator (Gross Rent Multiplier) (No Signup)

The $425,000 price equals 9.3 years of gross rent, before vacancy, expenses, or the loan take anything out.

Years of rent it takes to add up to the price

cumulative, by year

Price$425,000
Gross rent$820,800
NOI$471,960

The math, with your numbers

Gross annual rent$45,600Monthly rent × 12$3,800 × 12

GRM9.3Price ÷ gross annual rent$425,000 ÷ $45,600

Gross yield10.7%Gross annual rent ÷ price$45,600 ÷ $425,000

Vacancy + expense ratio42.5%(Vacancy + operating costs) ÷ gross rent($2,280 + $17,100) ÷ $45,600GRM ignores this line.

Cap rate6.2%(Gross rent − vacancy − operating costs) ÷ price$26,220 ÷ $425,000The same price once expenses are counted.

Two buildings at the same GRM can run expense ratios twenty points apart. GRM sorts listings. It cannot value one.

How this calculator works

GRM = Purchase Price ÷ Gross Annual Rent. On the $425,000 duplex collecting $45,600 a year before any deduction: $425,000 ÷ $45,600 = 9.3. The reciprocal reads as a gross yield, so a GRM of 9.3 means gross rent equal to 10.7% of price.

GRM uses gross rent, which means no vacancy, no expenses, no financing. That is the design rather than an oversight: one division, two numbers both printed on the listing, nothing to argue about. It sorts twenty candidates down to the five worth underwriting properly. It cannot value a property, because two buildings at an identical GRM can have expense ratios twenty points apart.

Key insights

GRM and cap rate disagree in a specific and informative way. This duplex is 9.3 GRM and 6.2% cap. A building at the same 9.3 GRM but a 55% expense ratio produces a 4.8% cap rate, because GRM cannot see what it costs to run the place.

A GRM comparison only carries meaning inside one property type and one submarket. Student rentals, which turn over every twelve months and carry heavier turnover and management costs, do not compare to single-tenant net lease on this metric in any useful way.

Ignoring expenses means GRM systematically flatters the buildings with the worst ones. The properties that screen cheapest are often the ones where the owner pays heat, the taxes were just reassessed, or deferred maintenance is about to come due.

Gross rent in the denominator makes GRM vulnerable to a rent roll that is aspirational rather than collected. A listing quoting market rent on a building running 12% vacant produces a multiplier no buyer will ever actually experience.

Frequently asked questions

What is the gross rent multiplier formula?›

GRM = Purchase Price ÷ Gross Annual Rent. Use collected rent rather than asking rent, and use gross, before vacancy or any expense. $425,000 ÷ $45,600 = 9.3.

What is a good gross rent multiplier?›

Lower means cheaper per dollar of rent, but the only comparison that means anything is against similar buildings in the same submarket. A 9.3 in one market is aggressive and in another is a bargain, and GRM carries no information about which.

What is the difference between GRM and cap rate?›

GRM uses gross rent and ignores expenses; cap rate uses NOI and accounts for them. GRM is a screen and cap rate is an analysis. This duplex reads 9.3 and 6.2% respectively.

Can I convert GRM to a cap rate?›

Only if you know the expense ratio, at which point you have enough to compute the cap rate directly. Cap Rate = (1 minus expense ratio) ÷ GRM. The conversion needs the exact input GRM was designed to skip.

Should GRM use monthly or annual rent?›

Annual is the convention, and it produces the familiar single-digit multipliers. A monthly-rent version yields numbers around twelve times higher and is not comparable to anything published.

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