1. What is Gross Rent Multiplier?

The Gross Rent Multiplier (GRM) is a screening metric used in real estate to evaluate investment properties. It provides a quick way to compare the relative value of similar properties in the same market.

2. How Does the Calculator Work?

The calculator uses the GRM formula:

Where:

• \( Price \) — Property purchase price (USD)
• \( Annual\ Rent \) — Total yearly rental income (USD)

Explanation: The GRM tells you how many years it would take for the property's rental income to pay for itself, ignoring expenses and financing.

3. Importance of GRM Calculation

Details: GRM helps investors quickly compare properties and identify potentially good deals. Lower GRMs generally indicate better investment opportunities.

4. Using the Calculator

Tips: Enter the property price and annual rent in USD. Both values must be positive numbers. The calculator will output the unitless GRM value.

5. Frequently Asked Questions (FAQ)

Q1: What is a good GRM value?
A: This varies by market, but generally GRMs between 4-10 are common for residential properties. Lower values may indicate better deals.

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 than cap rate.

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

Q4: What are limitations of GRM?
A: GRM doesn't account for operating expenses, vacancies, financing costs, or property appreciation.

Q5: Should I use monthly or annual rent?
A: The calculator uses annual rent. If you have monthly rent, multiply it by 12 before entering.