Gross rent multiplier (GRM) is a property's price divided by its gross annual rental income. A building priced at 5,000,000 that collects 500,000 of gross rent a year has a GRM of 10. It is a quick screening ratio: a lower GRM means less price per dollar of rent, but it ignores vacancy and operating expenses.
Updated 19 October 2026.
The formula
GRM = price ÷ gross annual rental income
Gross rental income is the rent before any expenses. Decide what "gross" means before you compare anything: scheduled rent at full occupancy, or rent actually collected. The two give different multiples for the same building.
Some brokers quote a monthly version, price divided by monthly gross rent. The monthly figure is 12 times the annual one. Mixing the two is an easy way to get a GRM comparison wrong, so label which one you use.
A worked example (hypothetical numbers)
A small apartment building is listed at 2,400,000. Its rent roll, annualized, shows 240,000 of scheduled gross rent.
GRM = 2,400,000 ÷ 240,000 = 10.
If three similar buildings in the same submarket sold at GRMs of 9, 10 and 11, the listing sits in the middle of that set. The figures are invented for illustration.
Using GRM to estimate value
The same formula runs backward. Find the GRMs of recent sales of similar properties, pick a multiple that fits, and multiply it by the subject's gross rent:
Indicated value = GRM from comparable sales × the subject's gross annual rent
If comparable sales point to a GRM of 10 and the subject's gross rent is 240,000, the indication is 2,400,000. This is only as reliable as the comparables. They must be the same property type, in the same market, sold recently, with rent measured the same way. For how comparable sales are chosen, see what comparable sales are.
What GRM leaves out
GRM does not see expenses. Take two buildings, each priced at 5,000,000 with 500,000 of gross rent. Both have a GRM of 10.
- Building A runs a 35 percent expense ratio. NOI is 325,000, a 6.5 percent cap rate on the price.
- Building B runs a 55 percent expense ratio. NOI is 225,000, a 4.5 percent cap rate.
Same GRM, a two-point gap in yield. The figures are invented for illustration. That is why GRM is a first filter. Once a building passes it, the analysis moves to net operating income and the cap rate.
GRM also ignores vacancy, the length and quality of leases, capital needs and financing. A building with a rent roll that does not tie to its operating statement can show a flattering GRM on rent that nobody pays.
When GRM is useful
- Screening a list of small income properties quickly, before any file is opened.
- A sanity check beside a cap rate: if the two point in different directions, an expense or vacancy assumption is doing the work.
- Spotting a listing whose price is far from similar sales on the same rent basis.
It is a weak basis for larger commercial property, where lease terms and expense structures vary too much for one multiple to describe.
Where Titleman fits
Titleman builds the inputs a GRM screen needs and the analysis that follows it. For an address, it assembles comparable sales with each figure traced to its source or formula and the gaps named, and returns a value opinion in Excel with a PDF or deck. That lets you test a GRM indication against the income approach on one set of sourced numbers. See the best commercial property valuation software, whether AI can value a commercial property and valuing a list of properties at once with AI. For the full set of options, see real estate underwriting with AI.
What this does not replace
A GRM is a screening ratio, and a Titleman value opinion is not an appraisal. Titleman returns a value opinion or an indicated value, never a final price or a buy or sell verdict. It does not replace a licensed appraisal where a lender, a court or a regulator requires one, and it does not replace your own review of the leases and the operating statement.
Common questions
What is gross rent multiplier (GRM)? Gross rent multiplier is a property's price divided by its gross annual rental income. A property priced at 5,000,000 that collects 500,000 of gross rent a year has a GRM of 10. It is a quick screening ratio that ignores expenses and vacancy.
How do you calculate GRM from monthly rent? Divide the price by monthly gross rent to get a monthly GRM, or multiply the monthly rent by 12 and divide the price by that annual figure. Use the same basis on every property you compare, because the two versions differ by a factor of 12.
What is a good GRM? There is no universal good number. A lower GRM means less price paid per dollar of rent, but what counts as low depends on the market, the property type and the expense ratio. Compare a property only with similar properties in the same market, using the same rent definition.
What is the difference between GRM and cap rate? GRM uses gross rent and ignores operating expenses. Cap rate uses net operating income, so it reflects expenses and vacancy. Two properties can share a GRM and have very different cap rates.
Can you use GRM for commercial property? It is used mostly as a quick screen on small residential income properties. For commercial property with varied leases and expense structures, the income approach on net operating income is the stronger basis, and GRM is a first filter only.