Free tool and guide
Gross rent multiplier calculator a quick price check
GRM compares price with rent and ignores everything else, which makes it fast and limited. Enter a price and rent below to compare it with sales nearby.
The gross rent multiplier, or GRM, is a property's price divided by its gross annual rent. A property priced at $8,000,000 with $875,000 of gross rent has a GRM of about 9.1. Lower means you pay less per dollar of rent.
GRM calculator
Enter a price and gross rent to get the GRM, then test what that rent is worth at a GRM from comparable sales. It runs in your browser: your numbers are not uploaded, saved or tracked, and there is no sign-up.
Showing invented example numbers
- Gross rent multiplier
- 9.14
- Price divided by gross annual rent
- Value at the GRM tested
- $7,000,000
- Monthly-rent GRM
- 109.7
- Some markets quote it on monthly rent
- Cap rate
- 6.50%
Arithmetic only, with no market benchmarks. This is not a loan quote or advice.
The GRM formula
GRM = price / gross annual rent. Rearranged, value = gross annual rent x GRM. Some markets quote it on monthly rent, so check before you compare, because the numbers differ by a factor of twelve.
A worked example
$8,000,000 on $875,000 of gross annual rent is a GRM of 9.14, or 109.7 on monthly rent. If comparable sales nearby traded at a GRM of 8, this rent would imply $7,000,000.
When GRM helps, and when it does not
GRM is useful as a first filter on small, similar properties such as apartment buildings in one neighborhood, where expenses tend to run alike. It misleads when they do not.
- It ignores expenses. Two buildings with equal rent and price have equal GRMs, even if one pays far more to run.
- It ignores vacancy. Gross rent is what could be collected, not what is.
- It says nothing about who pays what. A building where the owner pays utilities is not like one where tenants do.
Once you have real numbers, move to NOI and a cap rate, which account for expenses.
Frequently asked
- How do you calculate a gross rent multiplier?
- Divide the price by the gross annual rent. $8,000,000 on $875,000 of rent is about 9.1.
- What is a good GRM?
- There is no universal figure. Compare it only with recent sales of similar properties in the same market, on the same rent basis.
- What is the difference between GRM and a cap rate?
- GRM uses gross rent and ignores expenses. A cap rate uses NOI, so it accounts for expenses and vacancy, and is more informative.
Keep reading
Cap rate calculator
Cap rate, implied value, and how far value moves with the rate.
NOI calculator
Net operating income from income and expense lines.
Rent roll analyzer
Occupancy, loss to lease, rollover and concentration from a rent roll.
Pacific Software Ventures built this tool and guide, and sells AI consulting and training to commercial real estate firms. This is general education, not investment, legal or tax advice.
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