What is a good GRM for a rental property?
In a balanced market, a GRM below 6 is excellent, 6–9 is a reasonable screening range, 9–12 is concerning, and above 12 indicates the property is likely overpriced for rental income. These thresholds shift based on market type — high-demand markets may accept higher GRM, while low-cost markets expect lower GRM.
Is GRM the same as Cap Rate?
No. GRM uses gross rent and ignores operating expenses. Cap Rate uses Net Operating Income (after expenses). Gross Income Yield (the inverse of GRM) is not a Cap Rate — it does not account for vacancy, management, taxes, insurance, or repairs.
Does GRM include vacancy?
Primary GRM does not include vacancy — it uses scheduled gross rent. This calculator optionally shows an Effective GRM that adjusts for vacancy, but the primary verdict always uses gross rent without vacancy deductions.
Should other income like parking or laundry be included in GRM?
Not in Primary GRM. The industry standard GRM formula uses scheduled rental income only. Other income (parking, laundry, storage, pet fees) is excluded from Primary GRM so it remains comparable to market benchmarks. This calculator shows an optional Income-Adjusted GRM when other income is entered.
What does "Years to Recoup" mean?
Years to Recoup equals GRM and represents how many years of gross rent it would take to equal the purchase price. This assumes 100% of gross rent goes toward recovering the price — before vacancy, expenses, financing, taxes, repairs, and management fees. It is a rough comparison tool, not a true payback metric.
How is Gross Income Yield different from Cap Rate?
Gross Income Yield = Annual Gross Rent ÷ Property Price × 100. It is the mathematical inverse of GRM. It does not account for operating expenses, vacancy, or NOI. Cap Rate = NOI ÷ Property Price × 100, where NOI accounts for all operating expenses. Use the Cap Rate Calculator for accurate yield analysis.
When should I use GRM vs. Cap Rate?
Use GRM for fast first-pass screening — to decide whether a deal is worth analyzing further. Use Cap Rate for more accurate yield analysis once you have expense data. GRM requires only two inputs (price and rent), making it ideal for initial deal review. Cap Rate requires a full expense estimate.
Does a low GRM always mean a good deal?
No. A low GRM is a positive signal, but it does not guarantee a good deal. Verify rent quality (is the rent sustainable and at market rate?), property condition, expense burden, and local market context. Some properties show low GRM because they are distressed, in weak rental markets, or have inflated rent that will not hold.