Price divided by annual rent
Gross rent multiplier is property price divided by scheduled annual rent. Gross yield is the inverse: annual rent divided by price, or 1 ÷ GRM. Cap rate uses net operating income, not rent. The rental-yield page applies occupancy and holding costs. Cash-on-cash uses levered cash flow over cash invested. GRM is a first screen before those measures.
GRM = property price ÷ annual gross rent
Gross yield = annual gross rent ÷ property price
Implied price = target GRM × annual gross rent
Example
A $300,000 property renting for $2,500 a month has $30,000 of annual rent, a GRM of 10, and a 10% gross yield. At a target GRM of 9, the same rent implies a $270,000 price. $500,000 of price against $40,000 of annual rent is a GRM of 12.5.
What GRM leaves out
Vacancy, operating expenses, capital expenditure, debt service, and income tax never enter the ratio. Two buildings with the same GRM can still differ in expense load, lease quality, and financing. Compare GRM against similar properties in the same market rather than treating one number as a buy signal.