The formulas
- GRM = price / annual gross rent
- Gross yield = annual gross rent / price
- Value = annual gross rent x market GRM
How it works
The gross rent multiplier is a quick screen. It divides price by gross annual rent, ignoring expenses and vacancy. A GRM of 10 means the price is ten years of gross rent.
Because it ignores costs, two buildings with the same GRM can have very different net income. Use it to filter, then use the cap rate calculator on the ones that pass. Compare only with similar property types in the same market.
Illustrative figures only. Check the result against your firm's methodology before relying on it.
Common questions
Is a lower GRM better?
A lower GRM means more rent per dollar of price, but check expenses and condition.
What rent do I use?
Scheduled gross rent at market, before vacancy and expenses.
How is it different from cap rate?
Cap rate uses net income. GRM uses gross income.
Formulas on this page are the standard definitions.
Runs in your browser. The figures you type are not sent to CORAA or stored. Check the result against your firm's methodology before relying on it.