Gross rent multiplier (GRM) is a rental property’s price divided by its annual gross rental income before any expenses are deducted — a fast screening ratio for comparing similar properties, not a substitute for full cash-flow analysis.
GRM ignores operating costs entirely, so two properties with the same GRM can carry very different true returns once property tax, condo fees, insurance and repairs are accounted for — that is the trade-off for its speed as a screening tool. When a client is actually trying to finance an income property rather than just screen it, CMHC’s income-property mortgage insurance page shows the mechanism the lender actually applies: “up to 50% of the gross rental income for the subject property may be included,” folded into a 39% GDS / 44% TDS debt-service test rather than expressed as a multiplier at all. Pointing a client to that distinction — a screening ratio versus a lender’s actual qualification math — avoids treating GRM as more than it is.
A triplex is listed at $780,000 and rents for a combined $4,500 a month, or $54,000 a year gross. GRM = $780,000 ÷ $54,000 = 14.4. A comparable triplex nearby produces the same $54,000 a year but is listed at $700,000: GRM = $700,000 ÷ $54,000 = 12.96. The lower GRM signals the second property is priced more cheaply relative to the rent it produces — but that comparison assumes the two properties’ operating costs are similar, which is exactly the assumption a fuller cash-flow review, not a GRM alone, needs to test.
See also: Capitalization rate, defined is the sharper version of the same comparison once operating costs are known, and both sit alongside the property’s own tax exposure (underused housing tax, defined).
A 30-minute call is enough to tell you whether AI pays for itself here.
