Gross Rent Multiplier (GRM) Calculator - Rental Flow
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Gross Rent Multiplier Calculator

A fast first screen for any rental: how many years of gross rent would it take to "pay back" the purchase price? Lower is generally cheaper relative to what it collects.

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What this calculator does

The Gross Rent Multiplier (GRM) compares a property's price to the rent it brings in, before any expenses are subtracted. It's deliberately simple: a quick way to rank or screen listings before you dig into a full cap rate or cash-on-cash analysis.

The formula

GRM = Purchase Price ÷ Annual Gross Rent

Because GRM ignores operating expenses, vacancy, and financing, two properties with the same GRM can have very different actual returns. Use it to narrow a list of candidates, then run cap rate or cash-on-cash on the survivors.

Worked example

$200,000 property, $24,000 annual rent

Purchase price$200,000
Annual gross rent$24,000
Gross Rent Multiplier8.33

A GRM of 8.33 means the property's price is 8.33x its annual gross rent. What counts as "good" varies a lot by market, so use GRM to compare similar properties in the same area, not as a universal cutoff.

What is a good gross rent multiplier?

Gross rent multiplier (GRM) is purchase price divided by annual gross rent, so a lower number is generally better: it means you pay less for each dollar of rent. Many residential markets fall somewhere between a GRM of 4 and 10, but the right range is entirely local, so compare a property only against others in the same area.

GRM is a fast screening tool, not a final answer. Because it uses gross rent and ignores expenses, two properties with the same GRM can have very different actual returns once taxes, insurance, and maintenance are counted. Use it to shortlist deals, then run cap rate or cash-on-cash on the survivors.

Try it with your own numbers →

Frequently asked questions

GRM uses gross rent and ignores operating expenses, which makes it quick but rough. Cap rate uses net operating income, which subtracts expenses, so it is more accurate but needs more data. GRM is for fast screening; cap rate is for serious analysis.
Lower is generally better for a buyer, because it means you are paying fewer dollars of price per dollar of annual rent. A high GRM suggests the property is expensive relative to the rent it produces, though in strong appreciation markets buyers sometimes accept higher GRMs.
GRM uses gross scheduled rent, the total rent before any expenses or vacancy. That is what makes it simple to calculate from a listing, but it also why it cannot tell you whether a property is actually profitable on its own.
Not reliably. GRM reflects local price-to-rent norms, which vary widely by market. A GRM that looks high in one city may be normal in another. Always compare GRM among comparable properties in the same area and class.