Category
Real Estate
Rental Yield + GRM Calculator
Calculate gross yield, net yield, and gross rent multiplier for rental properties
Estimated time
1 min
Yield + GRM Inputs
Calculate gross rental yield, net rental yield, and gross rent multiplier (GRM) from rent and expense assumptions.
Price basis for yield and GRM calculations.
$
Base monthly rent used to build annual gross rent.
$
Optional recurring income such as parking, storage, or laundry.
$
Expected percentage of annual gross rent not collected due to vacancy or credit loss.
%
Annual recurring operating costs used for net yield and NOI.
$
Formula Legend
Formula used
Annual Gross Rent = (Monthly Rent + Monthly Other Income) x 12; Gross Yield = Annual Gross Rent / Property Price x 100; Net Yield = (Effective Income - Operating Expenses) / Property Price x 100; GRM = Property Price / Annual Gross Rent
Annual Gross Rent- scheduled annual rent and other rent-like income before vacancy
Effective Income- annual gross rent after vacancy adjustment
Gross Yield- annual gross rent as a percentage of property price
Net Yield- annual net operating income as a percentage of property price
GRM- property price divided by annual gross rent
Yield and GRM are screening metrics and do not replace full underwriting.
How Rental Yield And GRM Are Calculated
Yield metrics show annual income return relative to property price, while GRM compares price to gross annual rent.
- Gross yield uses annual gross rent before vacancy and expenses.
- Net yield uses effective rent after vacancy minus operating expenses.
- GRM is purchase price divided by annual gross rent.
- Lower GRM generally indicates stronger rent relative to price, all else equal.
Examples
Balanced rental profile
Inputs: $500,000 property, $3,200 monthly rent, 5% vacancy, $11,500 expenses
Result: Gross yield around 7.68%, net yield around 5.01%, GRM around 13.0x
Net yield highlights the real impact of vacancy and expenses.
Lower rent neighborhood
Inputs: $420,000 property, $2,400 monthly rent, 4% vacancy, $9,800 expenses
Result: Lower gross yield and higher GRM
Higher GRM can indicate tighter income relative to acquisition cost.
Accessory income boost
Inputs: $650,000 property, $3,800 monthly rent plus $250 monthly other income
Result: Both gross yield and GRM improve with additional recurring income
Consistent ancillary income can materially improve deal metrics.
FAQ
What is the difference between gross and net yield?
Gross yield uses top-line rent only, while net yield subtracts vacancy impact and operating expenses.
Should vacancy always be included?
Yes for planning. Even strong markets usually have some turnover and non-paying periods over time.
Is a lower GRM always better?
Not always. A lower GRM can be attractive, but condition, growth potential, and risk also matter.
Can I use monthly rent from future projections?
Yes, but note your assumptions clearly. Pro forma rents can differ from current market rent.
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