How do you calculate GRM?

Divide the purchase price by the annual gross rent. A $300,000 property renting for $2,500 a month collects $30,000 a year and has a GRM of 10. Gross rent is the scheduled rent at full occupancy, before vacancy and before any expenses.

Multiply the monthly rent by twelve first. Include recurring other income such as parking, laundry or storage if you include it for every property you compare. Leave out one-time fees and utility reimbursements. Then divide the price by that annual figure.

Some investors divide by one month of rent instead, which gives a number twelve times larger: 120 for the same property. Annual is standard, but if you see a GRM over 100, it is the monthly version. The formula also runs backwards. Price divided by GRM and by twelve gives the rent a property needs, and annual rent times the market GRM gives a rough value.