1. What is the Gross Rent Multiplier?

The Gross Rent Multiplier (GRM) is a screening metric used to evaluate rental property investments. It shows the relationship between the property's price and its gross rental income, helping investors compare properties quickly.

2. How Does the Calculator Work?

The calculator uses the GRM formula:

Where:

• Property Price — The purchase price of the property in USD
• Annual Gross Rent — The total yearly rental income in USD

Explanation: A lower GRM suggests a better investment opportunity as it indicates you're paying less for each dollar of rental income.

3. Importance of GRM Calculation

Details: GRM helps investors quickly compare multiple properties, screen potential investments, and estimate property values based on rental income. However, it doesn't account for operating expenses.

4. Using the Calculator

Tips: Enter the property purchase price and total annual gross rent (before expenses). Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a good GRM value?
A: This varies by market, but generally 4-7 is considered reasonable for residential properties. Lower values are better.

Q2: How does GRM differ from cap rate?
A: GRM uses gross rent while cap rate uses net operating income. GRM is simpler but less comprehensive.

Q3: When is GRM most useful?
A: For quick comparisons of similar properties in the same market area during initial screening.

Q4: What are limitations of GRM?
A: Doesn't account for vacancies, operating expenses, financing costs, or property taxes. Best used with other metrics.

Q5: Can GRM estimate property value?
A: Yes, by multiplying GRM by annual rent: Value = GRM × Annual Gross Rent (for comparable properties).