Gross rent multiplier
Property price divided by yearly gross rent. A rough shortcut for comparing properties. A GRM of 10 means the price is 10 times the annual rent.
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See how it worksWhere this comes up: on the market
Part 1 of 4
Why a seller cares
GRM is a quick screen investors run on your rental: price divided by yearly rent. If the local GRM is 10 and your rent is $27,000, an investor's first number is $270,000, before they look closer.
Part 2 of 4
A simple example
Your duplex grosses $27,000 a year. Small rentals in your market trade at a GRM of about 9.
| The arithmetic | The number |
|---|---|
| Gross rent | $27,000 |
| Times a GRM of 9 | About $243,000 |
| Times a GRM of 11, in a pricier market | $297,000 |
GRM is a shortcut from rent to price. It ignores expenses, which is why it is only a first look.
Part 3 of 4
What people get wrong
That a GRM is a valuation. It is a screen; the cap rate and the inspection come after.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
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