An investor divides a property’s price by its annual gross rental income and gets 12. That number is the gross rent multiplier, or GRM. It offers a quick, rough comparison of value relative to rent across similar properties.

A lower GRM suggests a buyer is paying less for each dollar of rent. The metric ignores vacancies, operating expenses, and financing, so it is only a starting screen. Properties with unusually low expenses or high future rent potential may justify higher multipliers.

GRM works best when comparing similar buildings in the same market. Appraisers and brokers sometimes use it for small residential income properties. Serious analysis still requires net operating income and cap rates. Used with eyes open, the gross rent multiplier quickly flags properties that deserve deeper review or immediate rejection.

• Ratio of price to annual gross rent
• Quick screening tool for income properties
• Ignores expenses and vacancy
• Best used among comparable properties