Free tool
Gross rent multiplier calculator
Enter a price and the gross annual rent to get the GRM, or a GRM and the rent to get the price it implies. A quick screen before you underwrite NOI — no sign-up.
Updated
Inputs
Scheduled rent for a year, before vacancy and expenses.
Gross rent multiplier
8.33
Price
$10,000,000
Gross annual rent
$1,200,000
Gross rent yield
12.00%
For illustration, not advice. GRM = price ÷ gross annual rent, so price = GRM × rent. It ignores vacancy and operating expenses, so two buildings with the same GRM can earn very different NOI. Compare only similar properties in the same market, and check value on NOI with a cap rate.
The gross rent multiplier formula
The gross rent multiplier (GRM) is a property’s price or value divided by its gross annual rent: how many years of scheduled rent the price represents. It solves two ways:
- GRM = price ÷ gross annual rent
- Price = GRM × gross annual rent
Gross rent is the rent scheduled for a year before vacancy, credit loss and operating expenses. That is what makes GRM fast — you need only a price and a rent roll — and what makes it rough.
A worked example
A property is offered at $10,000,000 with $1,200,000 of gross annual rent. Its GRM is $10,000,000 ÷ $1,200,000 = 8.33.
Go the other way: if similar buildings have sold at a GRM of 8, the same $1,200,000 of rent implies a price of 8 × $1,200,000 = $9,600,000 — $400,000 below the asking price.
Why GRM is only a screen
GRM ignores vacancy and operating expenses, so it treats a building that costs little to run the same as one that costs a lot. Two properties at the same price and rent show why a cap rate on NOI is the better measure of value:
| Line | Building A | Building B |
|---|---|---|
| Price | $10,000,000 | $10,000,000 |
| Gross annual rent | $1,200,000 | $1,200,000 |
| GRM | 8.33 | 8.33 |
| Effective gross income | $1,170,000 | $1,170,000 |
| Operating expenses | $520,000 | $640,000 |
| NOI | $650,000 | $530,000 |
| Cap rate (NOI ÷ price) | 6.50% | 5.30% |
Building B pays its own utilities and an older roof costs more to maintain. The GRM cannot see it; the cap rate can. Work out NOI in the NOI calculator and value it in the cap rate calculator.
When GRM is useful
- Screening many listings quickly, before you have a T-12.
- Comparing similar buildings in the same market, where expenses run alike.
- Sanity-checking an asking price against recent sales of comparable properties.
From a screen to an underwriting
Once a deal passes the screen, the real work is NOI: the rent roll, the T-12 and a normalized expense budget. In CREAssets the underwriting workbook carries them into NOI, a cash-flow model and a sale sheet. On the free stage you fill it by hand; AI parsing of the OM, rent roll and T-12 is on the Platform plan. See AI underwriting.
Related calculators
- NOI calculator
From gross potential rent, vacancy, other income and operating expenses: effective gross income, NOI and the expense ratio.
- Cap rate calculator
Enter any two of NOI, value and cap rate to get the third, with the value at nearby cap rates.
- DSCR and loan sizing calculator
From NOI, loan amount, rate and amortization: debt service, DSCR, debt yield and the maximum loan at your minimum DSCR.
- Break-even occupancy calculator
Operating expenses plus debt service over gross potential income — and the cushion against today’s occupancy.
Gross rent multiplier questions
How do you calculate the gross rent multiplier?
Divide the price or value by the gross annual rent. A $10,000,000 property with $1,200,000 of gross annual rent has a GRM of 8.33. Rearranged, price = GRM × gross annual rent: at a GRM of 8, $1,200,000 of rent implies $9,600,000.
Is a lower GRM better?
A lower GRM means you pay less per dollar of rent, but it ignores vacancy and expenses. A cheap building with high operating costs can have a low GRM and a poor cap rate. Use GRM to screen, then underwrite NOI.
What is the difference between GRM and cap rate?
GRM divides price by gross rent, before vacancy and expenses. A cap rate divides NOI — income after vacancy and operating expenses — by price. Two properties with the same GRM can have very different cap rates if their expenses differ.
Should I use monthly or annual rent?
Use the convention of the comparable sales you are measuring against. This calculator uses gross annual rent, the more common basis for apartment and commercial property; a GRM on monthly rent is twelve times larger.
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