GRM (Gross Rent Multiplier)
A quick way to compare rental properties based on price and income.
Definition
GRM is calculated by dividing the property price by its annual gross rental income. It tells you how many years of rent it would take to pay off the purchase price (ignoring expenses).
Formula
GRM = Property Price ÷ Annual Gross Rent
Example: $300,000 ÷ $36,000 = 8.3 GRM
How to Use GRM
- Lower GRM = more income relative to price
- Compare similar properties in the same market
- Use for quick screening before deeper analysis
Limitations
GRM ignores expenses, vacancies, and financing. Two properties with the same GRM can have very different actual returns. Always follow up with full analysis.