Gross Rent Multiplier Formula: How to Calculate GRM (Annual and Monthly)
The GRM formula, the monthly variant, what counts as gross rent, how to solve it backwards for price or rent, and the conversion to gross yield and cap rate. Worked examples included.
By the GRMCalculator.com team · Published September 5, 2026
The gross rent multiplier formula is:
GRM = purchase price / annual gross rent
Where annual gross rent is the monthly scheduled rent times twelve, plus any recurring other income, before vacancy and before expenses.
A $300,000 property renting for $2,500 a month has annual gross rent of $30,000 and a GRM of 10.
Step by step
- Find the monthly rent at full occupancy. Use the current lease, or market rent from comparable listings if the unit is vacant.
- Add recurring other income: parking, laundry, storage, pet rent. Leave out one-time fees and utility reimbursements.
- Multiply by twelve. This is annual gross scheduled income.
- Divide the purchase price by it.
The calculator does the four steps and shows the result alongside rent-to-price, gross yield and the cap rate the GRM implies.
The monthly variant
Some investors, and many older references, divide price by one month of rent instead of twelve:
Monthly GRM = purchase price / monthly gross rent
$300,000 / $2,500 = 120. Same property, same information, a number twelve times larger. The monthly version was more common when rents were quoted monthly and prices were lower. Annual is standard today, but if you see a GRM of 100 or more, it is monthly.
Gross yield is the inverse
Gross yield is annual gross rent divided by price:
Gross yield = annual gross rent / price = 1 / GRM
A GRM of 10 is a 10% gross yield. A GRM of 8 is 12.5%. A GRM of 12.5 is 8%. Listings outside the US often quote gross yield instead of GRM. It is the same screen.
Rent-to-price is the monthly version of gross yield
Monthly rent divided by price, as a percent, is the figure behind the 1% rule:
Rent to price = monthly rent / price
$2,500 / $300,000 = 0.83%. Since it is monthly, multiply by twelve to get gross yield (10%), and invert to get GRM (10). The three numbers are one fact:
| Rent / price | Gross yield | GRM |
|---|---|---|
| 0.50% | 6.0% | 16.7 |
| 0.70% | 8.4% | 11.9 |
| 0.83% | 10.0% | 10.0 |
| 1.00% | 12.0% | 8.3 |
| 1.25% | 15.0% | 6.7 |
Solving backwards
Because the formula has three terms, you can solve for any one.
Price from GRM and rent: multiply. Annual rent of $30,000 at a market GRM of 9 supports a price of $270,000.
Rent from GRM and price: divide twice. $300,000 at a GRM of 8 needs $37,500 a year, or $3,125 a month.
The calculator’s target GRM field does both: the price your rent supports at the target, and the rent your price would need.
Example: comparing three listings
| Property | Price | Rent | Annual | GRM | Gross yield |
|---|---|---|---|---|---|
| House A | $300,000 | $2,500 | $30,000 | 10.0 | 10.0% |
| House B | $240,000 | $2,300 | $27,600 | 8.7 | 11.5% |
| Duplex C | $380,000 | $3,300 | $39,600 | 9.6 | 10.4% |
House B has the lowest GRM. If the three have similar expenses, it is the best priced. If House B is a 1920s build with a 2.5% tax rate and the others are newer in a 1% county, the ranking may reverse once expenses are in. GRM cannot see that. The GRM vs cap rate guide covers the conversion.
From GRM to an implied cap rate
Cap rate is NOI divided by price. Under a vacancy and expense-ratio assumption:
Cap rate ≈ (1 − vacancy) × (1 − expense ratio) / GRM
With 5% vacancy and a 36% expense ratio, that is 0.608 / GRM. A GRM of 10 implies 6.1%. A GRM of 8 implies 7.6%. Change the expense ratio to 45% and the same GRM of 10 implies 5.2%. The gap between those two numbers is the whole reason GRM is a screen.
Common errors
- Using net rent (after expenses) and calling the result a GRM. That is closer to the inverse of cap rate.
- Mixing monthly and annual across a comparison. A GRM of 10 and a GRM of 120 can be the same property.
- Using asking rent instead of market rent on a vacant unit. Sellers project rent optimistically.
- Including a one-time fee or a security deposit in gross income.
- Comparing GRMs across markets or property types with different expense structures, and treating the lower one as the better deal.
The what is a good GRM guide covers where multipliers fall by market, and the GRM pages show the rent behind every multiplier from 4 to 20.
Frequently asked questions
How do you calculate GRM from monthly rent?
Multiply monthly rent by twelve, then divide the price by that. $300,000 / ($2,500 × 12) = 10. If you divide by monthly rent without multiplying, you get the monthly GRM of 120, which is a different convention for the same ratio.
Do you use gross or net rent in GRM?
Gross. GRM is defined on gross scheduled rent, before vacancy and expenses. A multiplier computed on net income is a different metric, roughly the inverse of cap rate.
Do other income sources count in GRM?
Most investors include recurring income like parking, laundry and storage in gross income, since it is part of what the property earns. One-time income and tenant reimbursements for utilities are usually left out. Be consistent across the properties you compare.
How do I find the price from GRM and rent?
Multiply annual gross rent by the GRM. If comparable properties sell at a GRM of 9 and yours rents for $30,000 a year, the GRM-implied value is $270,000.