Free tool — gross rent multiplier

gross rent multiplier calculator.

GRM is the bluntest number in real estate: purchase price divided by gross annual rent. A multiplier of 8 means the price equals roughly eight years of gross rent, before a single dollar of expense comes out — which is exactly why it is fast enough to rank a hundred listings and far too crude to price one. Enter a price and a rent below and you also get the inverse, the rent-to-price percentage every rule of thumb is really quoting.

the two inputs

purchase price ($)

rent is quoted

gross rent ($) · per month

target GRM · optional

Use gross scheduled rent — full market rent before vacancy, management, or repairs. GRM deliberately leaves every expense out, so pair it with the real operating expenses before you believe a low multiple. A monthly rent-to-price of 1.00% is the same screen as the 1% rule, read from the other direction.

gross rent multiplier

8.33

rent-heavy — low price per dollar of rent

purchase price ÷ gross annual rent

the inverse

gross monthly rent$1,850

gross annual rent$22,200

rent-to-price, annual12.0%

rent-to-price, monthly1.00%

years of gross rent8.3 yrs

max price at your target

$177,600

gross annual rent × 8.0

the 1% rule in GRM terms

8.33

1% of price monthly = 12% a year

GRM · 101

A sort order.
Not a valuation.

GRM ranks a list in seconds and never prices a building. The operating numbers do that — start with how to analyze a rental property.

The formula.

GRM = purchase price ÷ gross annual rent, and nothing else goes into it. Not the mortgage, not property taxes, not insurance, not vacancy, not the roof with four years left on it. That omission is the feature: two numbers you can read off any listing, and one multiple you can rank an entire market by before you open a spreadsheet.

numeratorpurchase price

denominatorgross annual rent

ignoresexpenses + financing

What counts as good.

Lower means you pay less for each dollar of rent — that is the whole message, and it is a screening message, not a verdict. Cash-flow markets commonly screen in the 6 to 10 band, appreciation markets sit well above it, and a tired house in rough condition can post a flattering multiple precisely because it is tired. Use GRM to decide what to underwrite next, never what to offer.

under 8rent-heavy screen

8 – 14the common band

over 14price-heavy

decides itcap rate + DSCR

The mistake.

Comparing GRM across markets as though the multiple means the same thing everywhere. Two houses at a GRM of 9 are not the same deal when one carries a tax and insurance load twice the other's — the gross rent is identical, the money that reaches your account is not. Property tax and insurance rules vary by state, so consult a CPA or attorney before you price that gap into an offer, and keep GRM comparisons inside one market.

same GRMdifferent net

swing factortaxes + insurance

rulecompare within one market

FAQ

Before you sort.

Straight answers on what the multiple can and can't tell you.

— The formula —

What is the gross rent multiplier formula?

GRM = purchase price ÷ gross annual rent. A $185,000 house renting for $1,850 a month collects $22,200 a year, so its GRM is 8.33. Use gross scheduled rent — the full market rent, before vacancy, taxes, insurance, or management come out of it.

— Good vs. bad —

What is a good gross rent multiplier?

Lower means you pay less for every dollar of rent, and that is the entire message. Cash-flow markets often screen somewhere in the 6 to 10 band and appreciation markets run well above it, but there is no universal threshold — GRM ignores every expense that decides whether a deal actually pays.

— GRM vs cap rate —

Gross rent multiplier vs cap rate — which should I use?

GRM to sort the list, cap rate to underwrite whatever survives. GRM needs two numbers off the listing and takes seconds. Cap rate needs a real operating expense budget, and it gives you a return you can compare across property types and price points.

— From monthly rent —

How do I calculate GRM from monthly rent?

Multiply the monthly rent by 12 first, then divide the purchase price by that annual figure. Dividing price by monthly rent gives a number twelve times larger — the most common GRM mistake there is. The calculator above does the conversion for you.

Live · all 50 states

Rank a market
by the multiple.

Verleon AI underwrites active listings nationwide and scores every one of them, so the shortlist you open is already sorted by the numbers instead of the listing photos.

Try Verleon AI →Run cap rate next