Gross Rent Multiplier Calculator

Formula

The formula to calculate the Gross Rent Multiplier (GRM) is:

\[ GRM = \frac{P}{AR} \]

Where:

Gross Rent Multiplier (GRM): A ratio between the purchase price of a property and the annual rental income generated from that property.
Purchase Price (P): The total cost to purchase the property.
Annual Rental Income (AR): The total rental income earned from the property in a year.
Significance: Helps investors evaluate the profitability of a rental property by comparing the purchase price to the rental income.

Let's say the purchase price (P) is $500,000 and the annual rental income (AR) is $50,000. Using the formula:

\[ GRM = \frac{500,000}{50,000} = 10 \]

So, the Gross Rent Multiplier (GRM) is 10.