Gross Rent Multiplier (GRM)

Gross rent multiplier (GRM) is a property’s price divided by its gross annual rental income, before any operating expenses are subtracted. A small multifamily property listed at $1,200,000 producing $150,000 a year in gross rent has a GRM of 8.0 — meaning a buyer is paying eight times one year’s top-line rent. It is the roughest possible way to price income real estate, which is exactly why it is useful: no rent roll detail, expense history, or NOI calculation is required to compute it.

GRM earns its keep as a first-pass screen, especially on small-balance and workforce-housing multifamily deals where a full trailing-twelve expense statement isn’t always available at the point a broker or lender is sizing up whether a deal is worth pursuing. Small-balance lenders will often quote a rough acceptable GRM range — commonly 7x to 11x depending on market and property class — to triage inbound deals before committing underwriting time to a full cap-rate and DSCR analysis. The catch is that GRM ignores operating expenses, vacancy, and capital needs entirely, so two properties with an identical 8.0 GRM can have very different NOI margins if one runs a 35% expense ratio and the other runs 55%; no lender will finalize terms off GRM alone, and borrowers should treat a GRM-based quote as an opening conversation, not a term sheet.

GRM shows up in our observed lending terms mainly from smaller banks and credit unions quoting appetite on workforce and small multifamily product, usually as a quick range rather than a precise cutoff — the kind of shorthand that only means something once you know which lender said it and about which property type.