Real Estate

Gross Rent Multiplier and 1% Rule Calculator

Two quick screens for rental properties.

By TheCalcTools Updated Formula checked and tested

Your numbers

Symbol only: enter amounts in the currency you pick.
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Your results

Gross rent multiplier (price ÷ annual rent)
Gross rent multiplier (price ÷ annual rent)
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Monthly rent as % of price
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1% rule
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Years of gross rent to equal price
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Gross Rent Multiplier and 1% Rule Calculator by TheCalcTools

How the Gross Rent Multiplier and 1% Rule Calculator works

Enter the purchase price and the monthly rent.

The gross rent multiplier is the price divided by annual rent.

The 1% rule asks whether monthly rent is at least 1% of the purchase price.

The formula

GRM = price ÷ annual gross rent1% rule: monthly rent ÷ price ≥ 1%

Worked example

Using the default values shown in the calculator:

Property price$260000
Monthly rent$2300
  1. Annual rent = $2,300 × 12 = $27,600.
  2. GRM = $260,000 ÷ $27,600 = 9.42.
  3. Monthly rent is 0.88% of the price. Fails: rent is below 1% of price.

Result:

Gross rent multiplier (price ÷ annual rent)9.42
Monthly rent as % of price0.88%
1% ruleFails: rent is below 1% of price
Years of gross rent to equal price9.4

Frequently asked questions

Is a lower GRM better?

Generally, yes: it means you pay less per dollar of rent. But GRM ignores expenses, vacancy and financing.

Is the 1% rule realistic?

It is a quick screen that many markets no longer meet. Use cap rate and cash-on-cash analysis for decisions.

Sources and further reading

Cap Rate CalculatorCompare income properties on a like-for-like basis Rental Yield CalculatorHow much does a rental property earn compared with its price? Rental Property ROI CalculatorEstimate the first-year return on a rental property: net operating income, cap rate… Home Renovation ROI CalculatorCheck whether a home improvement pays for itself: compare its cost with the resale… Cash-on-Cash Return CalculatorHow much cash does the property pay you each year relative to the cash you put in? House Flipping Calculator (70% Rule)Check whether a flip leaves enough margin

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This calculator gives estimates for information only. It is not financial advice, and your lender's or provider's figures will govern. Rates, fees and rules vary. See our disclaimer.