Gross Rent Multiplier

Gross Rent Multiplier (GRM) is a simple financial metric used in real estate to evaluate potential investment properties. It is calculated by dividing the property's price by its annual rental income. For example, if a property costs $200,000 and generates $20,000 in rent each year, the GRM would be 10 ($200,000 ÷ $20,000). Investors use GRM to quickly compare the profitability of different properties—lower GRMs indicate better potential returns. However, it's important to consider other factors, such as expenses and market conditions, before making investment decisions.