GRM is calculated as?

GRM is calculated as?

• A. GRM = Gross Annual Rent / Purchase Price
• B. GRM = Purchase Price / Gross Annual Rent
• C. GRM = NOI / Gross Annual Rent
• D. GRM = Purchase Price / Net Operating Income

Answer: (B)

GRM stands for Gross Rent Multiplier, a quick way to compare how much you’re paying for a property relative to the gross rental income it can generate. The calculation uses the Purchase Price divided by the Gross Annual Rent (the total rent collected in a year before expenses). So the proper formula is Purchase Price over Gross Annual Rent. This framing emphasizes value in relation to gross income, so a smaller GRM indicates a better price per unit of gross rent. The other options mix up the ratio or use a different income measure: using gross rent divided by price would give the reciprocal, and using NOI (net operating income) or net income instead of gross rent targets other metrics rather than GRM.

GRM stands for Gross Rent Multiplier, a quick way to compare how much you’re paying for a property relative to the gross rental income it can generate. The calculation uses the Purchase Price divided by the Gross Annual Rent (the total rent collected in a year before expenses). So the proper formula is Purchase Price over Gross Annual Rent. This framing emphasizes value in relation to gross income, so a smaller GRM indicates a better price per unit of gross rent. The other options mix up the ratio or use a different income measure: using gross rent divided by price would give the reciprocal, and using NOI (net operating income) or net income instead of gross rent targets other metrics rather than GRM.