InvestingAll terms starting with G
GRM (Gross Rent Multiplier)
Also called: gross rent multiplier
Property price divided by annual gross rent, a fast screening ratio that ignores expenses.
GRM is a first-pass filter for comparing similar properties in one market. A lower number means less price paid per dollar of rent.
It says nothing about expenses, so two properties with identical GRMs can perform very differently once taxes, insurance, and maintenance are counted. Screen with GRM, decide with NOI.
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Related terms
- Cap rate (Capitalization rate)Net operating income divided by property value, the unlevered yield used to compare properties.
- NOI (Net Operating Income)Income after operating expenses but before debt service, taxes on income, and capital expenditures.
- 1% ruleA screening heuristic that monthly rent should be roughly one percent of purchase price.
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