Gross Rent Multiplier Calculator
Price as a multiple of gross annual rent, and the price a target multiple implies.
Result
Gross rent multiplier: 9.04
GRM ignores vacancy and every operating cost, so it only compares two properties whose expense profiles are similar. Use the cap rate when costs differ.
- Price at your target multiple
- $283,200.00Estimate
- Gross annual rent
- $35,400.00
https://calcgallery.com/real-estate/gross-rent-multiplier-calculator/
Results are arithmetic from the numbers you enter, not investment, lending, tax or valuation advice. The site supplies no rents, prices, cap rates or market data, and whether a deal is sound depends on facts no calculator can see. Read the full disclaimer
How to use the Gross Rent Multiplier Calculator
- Enter the purchase price.
- Enter the gross rent and choose whether it is per month or per year.
- Set a target multiplier to see the price that rent would justify.
A price-to-rent screen
The gross rent multiplier divides price by a year of gross rent.
GRM = price ÷ gross annual rentimplied price = gross annual rent × target multiplierIt is the fastest comparison available because it needs two numbers that appear in every listing. Nothing about how the building runs enters it.
Its one real limitation
Because costs are absent, the multiplier silently assumes they are similar. Two buildings at the same price and rent share a multiplier when one pays all utilities and the other passes them to tenants, or when one is new and the other needs constant attention. In those cases the multiplier is comparing things that are not comparable.
The cap rate is the version that accounts for operating costs, at the price of needing them. Use the multiplier to shorten a list and the cap rate to decide.
With your numbers
- Gross annual rent = $35,400.00
- GRM = $320,000.00 ÷ $35,400.00 = 9.04
- At a multiple of 8 the same rent implies $283,200.00
Quick reference
GRM ignores vacancy and every operating cost, so it only compares two properties whose expense profiles are similar. Use the cap rate when costs differ.
| Example | Gross rent multiplier |
|---|---|
| Worked example at $320,000 | 9.04 |
| Rent entered annually | 9.04 |
| Higher price, same rent | 11.86 |
| Low-cost market | 8.05 |
| Expensive coastal market | 20.83 |
| Small multifamily | 9.03 |
Common questions about the Gross Rent Multiplier Calculator
- Is a lower multiplier always better?
- No. A low multiplier means a low price relative to rent, which can reflect higher costs, weaker demand or more work needed. It is a starting question, not an answer.
- What does GRM ignore?
- Everything except price and gross rent. Vacancy, taxes, insurance, management, maintenance and utilities are all outside it, so two properties can share a multiplier and earn very different amounts.
- When is it actually useful?
- When screening several similar properties in one market quickly, where the expense profiles are close enough that ignoring them does not reorder the list.
- Should I use gross or collected rent?
- Gross scheduled rent, before any vacancy deduction. That is what makes it a gross multiplier and what keeps it comparable between listings.