Free calculator · no signup
How many years of gross rent does this price represent? Enter price and annual rent for the fastest screen in property analysis, and the one that hides the most.
GRM = Purchase Price ÷ Gross Annual Rent. On the $425,000 duplex collecting $45,600 a year before any deduction: $425,000 ÷ $45,600 = 9.3. The reciprocal reads as a gross yield, so a GRM of 9.3 means gross rent equal to 10.7% of price.
GRM uses gross rent, which means no vacancy, no expenses, no financing. That is the design rather than an oversight: one division, two numbers both printed on the listing, nothing to argue about. It sorts twenty candidates down to the five worth underwriting properly. It cannot value a property, because two buildings at an identical GRM can have expense ratios twenty points apart.
GRM and cap rate disagree in a specific and informative way. This duplex is 9.3 GRM and 6.2% cap. A building at the same 9.3 GRM but a 55% expense ratio produces a 4.8% cap rate, because GRM cannot see what it costs to run the place.
A GRM comparison only carries meaning inside one property type and one submarket. Student rentals, which turn over every twelve months and carry heavier turnover and management costs, do not compare to single-tenant net lease on this metric in any useful way.
Ignoring expenses means GRM systematically flatters the buildings with the worst ones. The properties that screen cheapest are often the ones where the owner pays heat, the taxes were just reassessed, or deferred maintenance is about to come due.
Gross rent in the denominator makes GRM vulnerable to a rent roll that is aspirational rather than collected. A listing quoting market rent on a building running 12% vacant produces a multiplier no buyer will ever actually experience.
GRM = Purchase Price ÷ Gross Annual Rent. Use collected rent rather than asking rent, and use gross, before vacancy or any expense. $425,000 ÷ $45,600 = 9.3.
Lower means cheaper per dollar of rent, but the only comparison that means anything is against similar buildings in the same submarket. A 9.3 in one market is aggressive and in another is a bargain, and GRM carries no information about which.
GRM uses gross rent and ignores expenses; cap rate uses NOI and accounts for them. GRM is a screen and cap rate is an analysis. This duplex reads 9.3 and 6.2% respectively.
Only if you know the expense ratio, at which point you have enough to compute the cap rate directly. Cap Rate = (1 minus expense ratio) ÷ GRM. The conversion needs the exact input GRM was designed to skip.
Annual is the convention, and it produces the familiar single-digit multipliers. A monthly-rent version yields numbers around twelve times higher and is not comparable to anything published.
Free to use on your own site. Paste this where you want the calculator to appear. It resizes itself to fit, and works without the script if you would rather not load one.
<iframe src="https://www.realestatecalculations.com/embed/grm/"
title="Gross rent multiplier calculator by Recalc" width="100%" height="720" loading="lazy"
style="border:1px solid #DDE7E9;border-radius:8px;max-width:680px"></iframe>
<p style="font:14px/1.5 system-ui,sans-serif;margin:8px 0 0">
<a href="https://www.realestatecalculations.com/calculators/grm/">Gross rent multiplier calculator</a> by Recalc
</p>
<script src="https://www.realestatecalculations.com/embed.js" async></script>The attribution link is required. Everything else is yours to restyle.