Gross Rent Multiplier (GRM)
The simplest "napkin math" for comparing properties.
Formula
GRM = Property Price / Annual Gross Rent
Same numerator and denominator as Price-to-Rent ratio. GRM uses annual rent; P/R can use monthly × 12. Functionally identical — GRM is the commercial real estate convention.
What Is It?
GRM tells you how many years of gross rent it takes to equal the purchase price. It's the fastest way to screen deals — no expense data needed, just price and rent.
Worked Example
A $500K property with $3,000/mo gross rent.
| Property Price | $500,000 |
| Annual Gross Rent | $36,000 |
$500,000 / $36,000 = 13.913.9 GRM
Why It Matters
- ✓Fastest metric to calculate — price and rent only
- ✓Compare across neighborhoods instantly
- ✓Lower GRM = better deal (less you're paying per dollar of rent)
- ✓Widely used in multifamily / commercial to set pricing
What's Good vs Bad?
Excellent
Below 10 (strong rental yield)
Good
10–15
Poor
Above 20 (appreciation play)
Limitations
- ⚠Ignores ALL expenses (taxes, insurance, maintenance, vacancy)
- ⚠Two properties with same GRM can have wildly different cashflow
- ⚠Doesn't account for condition, age, or deferred maintenance
- ⚠A screening tool only — never base decisions on GRM alone
How Prop2Profit Uses This Metric
GRM is identical to the Price-to-Rent ratio Prop2Profit displays — same formula, different name. Use the P/R ratio on the detail page and compare zips by P/R on the Neighborhoods page.