Gross Rent Multiplier (GRM)

The Gross Rent Multiplier is used widely by investors as a quick way to compare rental properties and identify those with strong income potential. It is calculated by dividing the property’s purchase price by its gross annual rental income, providing a basic benchmark for how quickly the property might pay for itself in rental returns. Although GRM does not account for expenses such as maintenance, vacancy, management fees or taxes, it is still a useful first filter when analysing multiple investment opportunities. A lower GRM often suggests higher potential return, while a higher GRM may indicate a property that is overpriced relative to its rental income. Sellers should understand GRM because it affects how investors perceive value and how competitive their property appears in the market. A skilled agent can highlight strengths such as rental growth potential, upcoming infrastructure or strong tenant demand to compensate for a higher GRM. Presenting the right rental data can significantly influence an investor’s willingness to offer more.

Practical Example

You own a rental property worth approximately $800,000 that earns $40,000 in annual rent. This gives your property a GRM of 20, which some investors may initially view as average compared to other properties in the area. Your agent prepares detailed rental history, vacancy data and suburb growth trends to demonstrate that rent increases are likely in the next 12 months. During the campaign, two investors attend the inspection and request rental statements and comparable yields. Your agent explains the property’s strong tenant retention and potential to increase rent after minor improvements. With this information, investors understand the long term value and one submits a strong offer based on future rental performance rather than the headline GRM alone. The property sells at an excellent price because the agent positioned the investment story effectively.