Short answer: Gross rent multiplier (GRM) is a property's price divided by its annual gross rent. A lower GRM means you pay less for each dollar of rent. Like the 1% rule, it ignores expenses and financing, so it is a screen, not a verdict.
It uses the same formulas as FirstDoor's full deal score.
Frequently asked questions
How do you calculate gross rent multiplier?
Divide the purchase price by the annual gross rent (monthly rent × 12). A $250,000 home renting for $2,300 a month has a GRM of about 9.06.
How does GRM relate to the 1% rule?
A property that exactly meets the 1% rule has a GRM of 100 ÷ 12, about 8.33. Any GRM at or below 8.33 passes the 1% rule.
Why can two homes with the same GRM be very different deals?
GRM ignores taxes, insurance, HOA, repairs and your loan. Check cash flow, cap rate and DSCR before deciding.
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