Gross Rent Multiplier (GRM)
Definition
Gross Rent Multiplier (GRM) is the ratio of a property's price to its annual gross rental income. It is a coarse but fast valuation screen: lower GRM = more rental income per dollar of price. Unlike cap rate, GRM ignores operating expenses, so it is only directional — useful for first-pass screening, not for final underwriting. Most institutional underwriting cross-checks GRM against cap rate to flag a property where the expense ratio is materially out of line with comps.
Formula
Worked example
A duplex priced at $400,000 grossing $36,000/yr in rent has a GRM of 11.1. A comparable duplex in the same submarket priced at $360,000 grossing $36,000 has a GRM of 10.0 — the second is the better quick-screen value, assuming similar operating expense profiles.
How DealIntel uses it
DealIntel uses GRM only as a screening filter — properties with GRM materially above the submarket median trigger a 'review pricing' flag before strategy evaluation proceeds. Final valuation always uses cap rate (income-driven) or comp set (sale-driven).
Related terms
- Capitalization Rate · Cap RateThe annual unlevered return of an income property, expressed as a percentage of its value.
- Net Operating Income · NOIGross rental income minus operating expenses, excluding debt service — the unlevered cash flow of an income property.
- Comparable Sales · CompsRecent sales of similar properties used to estimate the market value of a subject property.
Matt Abadi is the founder of DealIntel. He leads the development of the platform's six-strategy underwriting engine, 25-point Kill List, and Monte-Carlo financial model — the institutional analysis stack DealIntel applies to every fix and flip deal. DealIntel was founded in 2025 with the central thesis that knowing when not to invest is the most valuable number on the page.