Gross Rent Multiplier (GRM)

GRM is a quick screening tool to evaluate property price values relative to gross potential rents.

Formula

GRM = Purchase Price / Gross Annual Rent

What this tells you

GRM calculates the number of years it would take for the property to pay for itself in gross rents. A lower GRM suggests a better, lower-priced deal relative to rental potential.

How to improve it

• Rent Increases: Bring under-market rents up to current market levels.
• Negotiate Purchase Discount: Reduce initial property transaction costs.