Gross Rent Multiplier (GRM) is the ratio of a real estate purchase price to its annual rental income before accounting for expenses. It represents the number of years the property would take to pay for itself in gross received rent.
Gross Rent Multiplier = Purchase Price / Gross Rent Annual Income
$100,000 Sale Price / (1000 per month rent * 12 months) = 8.33
The lower the GRM, the more rental income in relation to the purchase price.« Back to Glossary Index