Gross Rent Multiplier Calculator

Gross rent multiplier (GRM) calculator for screening rental properties

Gross rent multiplier (GRM) is a fast way to compare rental property pricing without building a full pro forma. It answers one practical question: how many years of gross rent does the purchase price represent? If two properties have similar risk and similar rent reliability, the one with the lower GRM is usually the better value because you are paying less for each unit of rent.

This calculator is built for the dominant use case most people search for: quick deal screening while browsing listings. You typically know the asking price and the expected monthly rent. You often do not know the true operating costs yet, and you do not want to waste time modeling them before you have narrowed your options. GRM helps you shortlist quickly, then you can move to deeper metrics like cap rate and cash-on-cash return once you have better data.

Enter the property purchase price and the expected monthly rent. The calculator returns the standard GRM using gross scheduled rent (monthly rent multiplied by 12). If you add the optional vacancy allowance, it will also estimate an effective gross income and an effective GRM. That second view is useful when you want a slightly more realistic screen without collecting a pile of expense inputs.

Assumptions and how to use this calculator

• Standard GRM is calculated as purchase price divided by gross annual scheduled rent (monthly rent × 12).
• Vacancy allowance is optional. If provided, effective gross income is reduced by that percentage (for example, 5% vacancy reduces income by 5%).
• Other monthly income is optional and is added to rent before applying vacancy (examples include parking, storage, or laundry income).
• GRM ignores all operating expenses, maintenance, rates, insurance, and management fees. It is a screening metric, not a profitability metric.
• GRM does not include financing. A property can have a good GRM but still be unaffordable or cash-flow negative depending on the loan terms.

Common questions

What is a “good” GRM?

There is no universal good number. GRM varies by location, property type, tenant quality, and the stability of rent collections. Use GRM mainly to compare similar properties in the same area. If a listing has a GRM that is meaningfully higher than nearby comparable rentals, it is often overpriced relative to rent, unless there is a clear reason (new build quality, unusually low risk, strong rent growth, or undervalued rent that can be raised).

Why does a lower GRM usually look better?

Because you are paying less purchase price for each unit of rent. All else equal, lower price relative to rent gives you more room to cover expenses and debt service. But “all else equal” is the catch. A low GRM can also signal higher risk, lower quality, weaker tenant demand, or rent that is not actually achievable.

Should I use current rent or market rent?

For screening, use the most defensible rent estimate you have. If the property is already rented and the lease terms are stable, current rent may be more reliable. If the current rent is far below market and you can legally and practically raise it, market rent may be a better planning number. If you use market rent, treat GRM as optimistic and validate later with real comps and local constraints.

What does the vacancy allowance change?

Vacancy turns scheduled income into a rough effective income. A property might show an attractive standard GRM, but if the area has frequent tenant churn or long letting periods, the effective income is lower and the effective GRM is higher. This calculator applies vacancy as a simple percentage reduction, which is easy to use when you do not have detailed vacancy history.

What should I do after GRM looks attractive?

Move to a metric that includes expenses. The next step is usually cap rate (net operating income divided by price) once you have credible expense estimates, then cash-on-cash return if you are financing. GRM helps you decide which deals are worth that extra work. It should not be the final decision tool.