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.
DealIntel's underwriting team builds and maintains the platform's six-strategy engine, 25-point kill list, and Monte-Carlo financial model. Every piece of long-form content on dealintel.io is reviewed by an underwriter with direct experience scoring residential investment deals.