What is a good gross rent multiplier?

It varies widely by market and property type, so there is no universal number. Lower is generally better, but always compare GRM among similar properties in the same area rather than across different markets.

How is GRM different from cap rate?

GRM uses gross rent and ignores expenses, while cap rate uses net operating income after expenses. GRM is faster but rougher; cap rate is more accurate for judging actual return.

Should I rely on GRM alone?

No. GRM is a screening tool. Before buying, run a full analysis with operating expenses, vacancy, and financing so you understand the property's real cash flow and return.

Mortgage Glossary

What is Gross Rent Multiplier (GRM)?

The gross rent multiplier, or GRM, is a property's price divided by its gross annual rent. It is a quick screening tool that shows how many years of gross rent it would take to equal the purchase price, before expenses. A lower GRM generally suggests a cheaper price relative to the rent the property brings in.

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Quick answer

Also known as: GRM, gross rent multiplier

Key points

GRM equals property price divided by gross annual rent.
It uses gross rent, ignoring all operating expenses.
A lower GRM suggests a lower price relative to rent.
GRM is a fast screen, not a substitute for cap rate or NOI.
Compare GRM only among similar properties in the same market.

Gross Rent Multiplier (GRM) explained

GRM is calculated by dividing the property price by the gross annual rental income, without deducting any operating expenses. Because it uses gross rent rather than net operating income, it is rougher than cap rate but very fast to compute, making it useful for an initial comparison of many listings at once.

In Canada, GRM is best used to compare similar properties in the same market, since expense ratios and rents vary by area and building type. A property with a low GRM may look attractive, but investors should follow up with a full analysis, because GRM ignores property tax, vacancy, maintenance, and financing entirely.

What a Gross Rent Multiplier (GRM) is for

GRM exists to give investors a fast, back-of-the-envelope way to rank potential purchases by price relative to rent. It helps you quickly weed out overpriced listings and shortlist properties worth a deeper look using cap rate and NOI.

How it can help you

GRM helps you screen many rental listings in minutes and focus your time on the most promising ones. Because it is only a starting point, you then confirm the numbers with expenses and financing. When you find the right property, Lenderoo shops 40+ lenders for free to help you qualify for an investment-property mortgage.

When it comes up

GRM comes up when an investor scans a dozen listings and wants a fast way to rank them. The properties with the lowest GRMs rise to the top of the shortlist, and the investor then runs detailed NOI and cap rate numbers before pursuing financing.

Example: comparing two properties by GRM

Property A is priced at $600,000 and rents for $42,000 a year gross. Its GRM is $600,000 divided by $42,000, which equals about 14.3. Property B is priced at $550,000 and rents for $44,000 a year gross, giving a GRM of $550,000 divided by $44,000, or 12.5.

Property B has the lower GRM, suggesting a cheaper price relative to its rent. That makes it the stronger candidate at first glance, though you would still confirm with full operating expenses before deciding.