What is gross rent multiplier (GRM)?
Definition
The gross rent multiplier (GRM) is a property's price divided by its annual gross rental income. It's a quick screening ratio — how many years of gross rent the price equals — that ignores operating expenses, so it's a filter rather than a full underwrite.
Formula
GRM = Property price ÷ Annual gross rent
Example
Worked example
Price of $400,000 and annual gross rent of $36,000 → GRM = 400,000 ÷ 36,000 = 11.1. (Example figures.)
How ReSharpe calculates this
ReSharpe shows the quick ratios for a fast screen, then goes further: it estimates rent from real closed leases and runs the full cap rate and cash-on-cash on real expenses — so GRM never has to stand alone.
Related: Cap rate · NOI · Comps
Frequently asked questions
- GRM vs cap rate — which is better?
- GRM is a quick screen using gross rent only; cap rate is more complete because it uses NOI (after expenses). Use GRM to filter fast, then cap rate and cash-on-cash to actually underwrite.
- What's a good GRM?
- Lower is generally better (you pay fewer years of gross rent for the property), but a 'good' GRM is market-specific and ignores expense differences — which is exactly why it's a screen, not a verdict.
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