February 19, 2025•2 min read
Gross Rent Multiplier (GRM): The Fastest Way to Screen a Deal
RentalIntel Team
Real Estate Investment Experts
Ever wonder if a property is priced too high?
GRM gives you a fast reality check.
The Formula
Where:
- Property Price = What you're paying for the property
- Gross Rental Income = Total rent collected per year
Real-Life Example
Property Numbers
| Metric | Amount |
|---|---|
| Property Price | $240,000 |
| Monthly Rent | $2,000 |
| Annual Gross Rent | $24,000 |
GRM Calculation
What Does a GRM of 10 Mean?
- Lower GRM = Better deal (faster payback time)
- Higher GRM = Slower returns (or overpriced property)
When GRM Matters (and When It Doesn’t)
✅ Great for quick deal analysis
✅ Easier to use than Cap Rate
❌ Ignores expenses, vacancies, and financing
❌ Only useful when comparing similar properties
Pro Tips
- Compare GRM across neighborhoods (market averages matter).
- Lower GRM is better, but balance it with other metrics.
- Use GRM for screening deals, but check NOI and Cap Rate for deeper analysis.
The Bottom Line
GRM is a quick shortcut—but don’t rely on it alone.
Use it to filter bad deals fast, then dig deeper with other metrics.
What’s the average GRM in your city? Share below!
