Use the Gross Rent Multiplier (GRM) tool by entering market value and annual rental income (plus vacancy loss) to see how many years of gross rent equal today’s price. Typical U.S. multifamily GRMs run 4 – 12 (Investopedia, 2023).
Gross Rent Multiplier Calculator
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How to use the tool
Market Value ($): Type the property’s asking price. Example A: 710 000 Example B: 915 000
Annual Rental Income ($): Enter yearly rent from occupied units. Example A: 46 200 Example B: 82 300
Lost Income from Vacancies ($): Add the rent you forfeit on empty units. Example A: 4 100 Example B: 6 800
Read the result: The calculator shows GRM; lower numbers mean faster pay-back.
Example A: $$ rac{710\,000}{46\,200+4\,100}= rac{710\,000}{50\,300}=14.12$$
Example B: $$ rac{915\,000}{82\,300+6\,800}= rac{915\,000}{89\,100}=10.27$$
Quick-Facts
Typical U.S. residential GRM range: 4 – 12 (Investopedia, 2023).
Median U.S. gross rent 2022: $1 234/month (U.S. Census Bureau, 2023).
Operating costs average 35 % of gross income for rentals (National Apartment Association, 2022).
Cap Rate considers net income, unlike GRM (CCIM Institute, 2023).
Frequently Asked Questions
What does a low GRM tell you?
A low GRM means the property price equals only a few years of gross rent, signaling stronger cash-flow potential (Investopedia, 2023).
How do I know if my GRM is competitive?
Compare your figure with recent sales of similar buildings in the same ZIP code; use MLS or assessor data (CoreLogic, 2023).
Can I estimate price if I know GRM?
Yes. Multiply neighborhood GRM by your property’s gross scheduled income to project a fair market value (CCIM Institute, 2023).
Does GRM include expenses?
No. “GRM ignores all operating costs and financing” (CCIM Handbook, 2022).
When should I recalculate GRM?
Update annually or after rent hikes, refinancing, or major capital work to keep benchmarks current (HUD Multifamily Guide, 2023).
Is GRM useful for commercial assets?
Use it only as a quick screen; investors shift to Cap Rate and DCF for deeper commercial analysis (Deloitte Real Estate Outlook, 2023).
What is a red-flag GRM?
Values above 15 generally indicate overpriced stock in most U.S. metros (Moody’s CRE Review, 2023).
How do vacancies impact GRM accuracy?
Understating vacancy loss inflates income and deflates GRM, masking true payback time (Marcus & Millichap, 2023).
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