GRM is a fast, deliberately crude screening tool — a quicker but less accurate cousin of this site’s cap rate calculator.
How it works
Property price divided by annual gross rent, before any operating expenses are subtracted. A GRM of 8 means it would take 8 years of gross rent to recover the purchase price.
What this does not include
GRM ignores operating expenses entirely — taxes, insurance, maintenance, vacancy — which is exactly why it’s a screening tool, not a substitute for cap rate. Two properties with identical GRMs can have very different real returns once expenses are accounted for.
How to use this calculator
- Enter the property’s asking price.
- Enter the annual gross rent it generates or is projected to generate.
Frequently asked questions
Is a lower GRM always better?
Generally yes as a first screen — a lower GRM means the price is a smaller multiple of gross rent — but it says nothing about the property’s actual expense ratio, which this site’s cap rate calculator does account for.
How is GRM different from cap rate?
Cap rate uses net operating income (after expenses); GRM uses gross rent (before any expenses) — GRM is faster to compute from a listing alone, at the cost of ignoring how expensive the property actually is to run.
What’s a typical GRM?
It varies widely by market and property type, so GRM is most useful comparing similar properties in the same area rather than against a universal benchmark.
