1. What is Gross Rent Multiplier?

The Gross Rent Multiplier (GRM) is a screening metric used in real estate to evaluate the relationship between a property's price and its gross rental income. It provides a quick way to compare the relative value of similar income-producing properties.

2. How Does the Calculator Work?

The calculator uses the GRM formula:

Where:

• Property Price — The purchase price or market value of the property (USD)
• Annual Gross Rent — The total annual rental income before expenses (USD)

Explanation: The GRM tells you how many years it would take for the property's gross rent to pay for itself, ignoring expenses and time value of money.

3. Importance of GRM Calculation

Details: GRM helps investors quickly compare properties and identify potentially good deals. A lower GRM generally indicates a better value, though it should be used alongside other metrics.

4. Using the Calculator

Tips: Enter the property price and annual gross rent in USD. Both values must be positive numbers. The calculator will compute the GRM ratio (unitless).

5. Frequently Asked Questions (FAQ)

Q1: What is a good GRM value?
A: It varies by market, but generally 4-7 is typical for residential properties. Lower values may indicate better value.

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 initial screening of similar properties in the same market.

Q4: What are limitations of GRM?
A: Doesn't account for expenses, vacancies, or financing. Shouldn't be used alone for investment decisions.

Q5: Should I use monthly or annual rent?
A: The formula uses annual gross rent. If you have monthly rent, multiply by 12 first.