Gross Rent Multiplier (GRM).
A definition, in plain English — with the books that teach it.
What it means
The Gross Rent Multiplier (GRM) is a quick screening metric for rental property investment, calculated by dividing the property's purchase price by its annual gross rental income. A lower GRM signals that the property generates more rent relative to its price. GRM is faster to compute than cap rate or cash-on-cash return because it ignores operating expenses, vacancies, and financing — making it useful for rapid comparisons across many properties but insufficient for final underwriting, where a full cash flow analysis is required.
Example
A fourplex lists for $600,000 and generates $6,500/month in gross rent ($78,000/year). GRM = $600,000 / $78,000 = 7.7. A competing duplex lists for $400,000 with $4,200/month gross rent ($50,400/year), giving a GRM of 7.9. All else equal, the fourplex offers slightly better rent relative to price — though expenses still need full analysis.