What does GRM mean?

GRM stands for gross rent multiplier. It is the purchase price of a rental property divided by its annual gross rent, and it tells you how many years of rent it takes to equal the price. A property priced at ten times its yearly rent has a GRM of 10.

Investors use it as a quick screen because it needs only two numbers from a listing. Sorting by GRM puts the properties with the most rent per dollar on top. Markets have characteristic multipliers: low-cost cities often trade at 6 to 9, most large metros at 9 to 13, and premium coastal markets at 15 or more.

GRM ignores vacancy, taxes, insurance, maintenance and management, so it is a proxy for a return, not a return. Two properties with the same GRM can have very different cap rates, which is why GRM sorts listings and cap rate underwrites them.