What is the gross rent multiplier?
Type the price and the gross rent to get the gross rent multiplier, or a rent and a multiplier to estimate a value. The gross rent multiplier calculator works on yearly or monthly rent and shows both.
- Gross rent multiplier
- 10
A price of $300,000.00 and gross rent of $30,000.00 give a gross rent multiplier of 10.
- On the other basis
- 120
Gross rent multiplier: 10. A price of $300,000.00 and gross rent of $30,000.00 give a gross rent multiplier of 10.
The results are estimates for information only. They are not financial, tax, or legal advice. Check the numbers with your lender or a qualified professional before you decide. Terms of use
How to calculate
Works out a rental property’s gross rent multiplier (price ÷ gross rent) on yearly or monthly rent, or the value or rent that a multiplier gives.
Example with the default inputs (What do you want to find? GRM, Rent is Per year, Price or value $300,000.00, Gross rent $30,000.00): A price of $300,000.00 and gross rent of $30,000.00 give a gross rent multiplier of 10.
Method: Gross rent multiplier = price ÷ gross rent. Value = gross rent × gross rent multiplier. Rent = price ÷ gross rent multiplier. A multiplier on monthly rent = 12 × the multiplier on yearly rent.
- Gross rent is all the rent before vacancy and expenses, for a year or a month as chosen; the multiplier is on the same basis.
- A gross rent multiplier from comparable sales is applied on the same basis it was found on.
- Arithmetic is exact on the typed decimals; money shows to the cent and multipliers to 2 decimals, halves rounded up.
Worked examples
Each example is checked against the calculator on every build.
- What do you want to find? GRM, Rent is Per month, Price or value $60,000.00, Gross rent $525.00 gives Gross rent multiplier 114.285714, On the other basis 9.52381.Source: Indiana Department of Local Government Finance, IN.gov FAQ on rental property (GRM = sale price ÷ monthly gross income; market value = monthly market rent × GRM; $60,000 ÷ $525 = 114; $600 × 114 = $68,400), https://faqs.in.gov/hc/en-us/articles/115005067007-I-own-a-rental-property-To-stay-competitive-I-cannot-raise-the-rent-What-can-I-do-to-help-offset-the-increases-in-property-taxes: $60,000 ÷ $525 = 114 (rounded there)
- What do you want to find? Value, Rent is Per month, Gross rent $600.00, Gross rent multiplier 114 gives Price or value $68,400.00, On the other basis 9.5.Source: Indiana Department of Local Government Finance, IN.gov FAQ on rental property (GRM = sale price ÷ monthly gross income; market value = monthly market rent × GRM; $60,000 ÷ $525 = 114; $600 × 114 = $68,400), https://faqs.in.gov/hc/en-us/articles/115005067007-I-own-a-rental-property-To-stay-competitive-I-cannot-raise-the-rent-What-can-I-do-to-help-offset-the-increases-in-property-taxes: $600 × 114 = $68,400
- What do you want to find? GRM, Rent is Per year, Price or value $850,000.00, Gross rent $126,000.00 gives Gross rent multiplier 6.746032, On the other basis 80.952381.Source: California State Board of Equalization, Appraisal Training, Lesson 9, Multipliers: Derivation and Valuation (sale price ÷ annual gross income; $850,000 ÷ $126,000 = 6.75), https://www.boe.ca.gov/info/iav/lesson9.htm: $850,000 ÷ $126,000 = 6.75 (rounded there)
- What do you want to find? Rent, Rent is Per year, Price or value $300,000.00, Gross rent multiplier 8 gives Gross rent $37,500.00, On the other basis 96.
How it works
Choose what to find and whether the rent is per year or per month. The multiplier is always on the same basis as the rent.
- Find the GRM: gross rent multiplier = price ÷ gross rent.
- Find the value: value = gross rent × gross rent multiplier.
- Find the rent: gross rent = price ÷ gross rent multiplier.
- On the other basis: with yearly rent, the multiplier on monthly rent = 12 × the multiplier; with monthly rent, the multiplier on yearly rent = the multiplier ÷ 12. In GRM mode this uses the GRM just found; otherwise the GRM typed.
Rules:
- Price: $0.01 to $1,000,000,000,000. Gross rent: $0.01 to $10,000,000,000. Gross rent multiplier: 0.01 to 1,000,000.
- No answer is too large or too small to show within these limits.
- The arithmetic is exact on the decimals you type. Money shows to the cent and multipliers to at most 2 decimals (trailing zeros dropped), with halves rounded up (away from zero), from the exact value.
Assumptions
- Gross rent is all the rent before vacancy and expenses.
- A multiplier taken from comparable sales is applied on the same basis (monthly or yearly) it was found on.
Worked examples by hand
Indiana’s example, monthly rent. $60,000 ÷ $525 a month = 114.29 (114.2857…; the source rounds to 114). On yearly rent: 114.2857… ÷ 12 = 9.52.
Indiana’s value, monthly rent. $600 a month × 114 = $68,400. On yearly rent the multiplier is 114 ÷ 12 = 9.5.
California’s example, yearly income. 20 units × $525 × 12 months = $126,000 a year; $850,000 ÷ $126,000 = 6.75 (6.746…). On monthly rent: 6.746… × 12 = 80.95.
Finding the rent. A $300,000 price at a yearly GRM of 8: rent = 300,000 ÷ 8 = $37,500 a year; on monthly rent the multiplier is 8 × 12 = 96.
Other questions people ask
What is the gross rent multiplier?
The gross rent multiplier (GRM) is a property’s price divided by its gross rent: how many years (or months) of rent the price equals, before any expenses. Comparing GRMs of similar rentals that sold shows which price looks high or low for the rent.
How do I calculate the gross rent multiplier?
Divide the sale price by the gross rent. A $300,000 house that rents for $30,000 a year has a GRM of 10. On monthly rent ($2,500) the same house has a GRM of 120.
Monthly or yearly rent?
Both are used. Indiana’s assessors use monthly rent: a $60,000 sale renting for $525 a month has a GRM of 114. California’s assessors usually work with yearly income, and many investors use yearly rent. Always compare multipliers on the same basis: the monthly GRM is 12 times the yearly one.
How do I use a GRM to estimate value?
Find the GRM of similar rentals that sold, then multiply the property’s gross rent by it. With a monthly GRM of 114, a home that would rent for $600 a month is worth about 600 × 114 = $68,400.
What is a good gross rent multiplier?
There is no single good value: it depends on the market and the property. A lower GRM means more rent for each dollar of price, but the GRM ignores vacancy, taxes, insurance and repairs, so check the cap rate as well before you buy.
What is the difference between GRM and cap rate?
The GRM uses gross rent and the price; the cap rate uses net operating income (rent minus vacancy and operating expenses) and the price. The cap rate shows what the property earns after its running costs.