Gross Rent Multiplier vs Gross Income Multiplier?

If you want a quick way to stack-rank deals (mostly use, two simple ratios get you there fast: Gross Rent Multiplier (GRM) and Gross Income Multiplier (GIM). Both compare a property’s price to the income it brings in. GRM looks at rent only. GIM looks at all income. Both are screening tools, not a full analysis.

Definitions

Gross Rent Multiplier (GRM): Price divided by annual gross rent. Rent only.

• Formula: GRM = Property Price ÷ Annual Gross Rent

Gross Income Multiplier (GIM)Price divided by total gross income. Includes rent plus other income like parking, laundry, storage, RUBS, pet fees, and vending.

• Formula: GIM = Property Price ÷ Total Gross Income

Lower numbers usually indicate more income per dollar of price. That can hint at stronger cash flow potential, but you still need to model expenses and financing to know the truth.

Simple example

• Price: $1,200,000

• Annual rent: $120,000

• Other income (parking and laundry): $12,000

GRM = 1,200,000 ÷ 120,000 = 10.0

GIM = 1,200,000 ÷ 132,000 = 9.09

Because GIM includes extra income, it is lower than GRM on the same deal.

What is “good” or “bad”

These ranges move with market, class, and location so there's gonna be a lot of variety. Still, a couple of useful frames:

• Larry Loftis (Investing in Duplexes, Triplexes, and Quads): investors often target GRMs roughly in the single digits to low teens. In practice many see 8 to 11 as a sweet spot for cash flow and 20+ as a hot property where you are buying location or growth rather than yield.

• Trion Properties (operator perspective): the lower the GRM, the more potentially lucrative the deal. Class B and C assets in secondary or tertiary markets usually show lower GRMs than Class A assets in primary core markets. Always compare like with like.

  
  

Treat these as directional. Your best benchmark is the recent sales set in the same submarket and vintage.

How to use GRM and GIM

1. Be explicit about the income basis. Say whether you used current scheduled rent, trailing-12 collected rent, or market rent. If you present GIM, list what you counted as other income.

2. Compare to comps, not national rules. Pull 3 to 6 recent sales. Compute each sale’s multiple using the actual income at the time of sale. Place your subject in that band.

3. Stress test with expenses. Follow with a cap rate or cash flow view. GRM and GIM ignore operating expenses, vacancy, property tax resets, insurance, and capex.

   1. So make sure you know their limitations!

4. Note unit mix. A studio-heavy building and a 3-bedroom-heavy building can have very different rent levels and therefore different GRMs. Keep comparisons apples to apples.

   
   

Pros and cons of GRM and GIM

Pros

• Very fast screen when you are scanning many deals

• Easy to explain and easy to compute

• Useful as a sanity check against broker quotes or a first-pass valuation

  
  

Cons

• Ignores expenses, vacancy, taxes after sale, reserves, and financing

• Can mislead across classes or markets if you do not compare like for like

• Not a decision metric. Use it to rank and filter, then underwrite

  
  

When to use each

• Use GRM when rent is basically the only income line. Classic for duplexes, triplexes, quads, and small apartments.

• Use GIM when other income is meaningful or you are looking at larger multifamily or commercial where ancillaries matter like on-site laundry or other income.

Final Thoughts:

• Appraisers usually use the annual figures for both GRM and GIM. Sometimes you'll see it listed as monthly so make sure you are comparing accurately. The key rule is to be consistent when comparing or evaluating real estate.