Not every property worth a closer look deserves a full underwriting right away. That's where GRM comes in — a fast, simple metric that helps investors quickly compare properties and identify which ones are worth digging into further.

What Is GRM?

Gross Rent Multiplier measures the relationship between a property's purchase price and its gross annual rental income. It tells you how many years of gross rent it would take to equal the purchase price — and it does it without requiring any expense data, which is both its strength and its limitation.

The formula is:

GRM = Property Price ÷ Annual Gross Rent

A Phoenix Example

A Phoenix rental property is priced at $400,000 and generates $36,000 per year in gross rent.

$400,000 ÷ $36,000 = GRM of 11.1

Now compare that to similar properties in the same submarket. If comparable homes are trading at GRMs of 13 or 14, this property is generating more income relative to its price — which signals it may be worth a much closer look.

What's a Good GRM in Phoenix?

In the Phoenix market, GRMs typically fall in the range of 10–14, though this varies by submarket, property type, and condition.

• Lower GRM — stronger gross income relative to purchase price, which often points toward better cash flow potential
• Higher GRM — higher price relative to rent, common in premium neighborhoods, newer construction, or high-appreciation areas where buyers are pricing in future value rather than current income

Neither is automatically better or worse. A higher GRM in a strong appreciation submarket may still make sense as part of a total return strategy. A lower GRM in a less desirable location may not perform as well as the number suggests once expenses are factored in.

Why GRM Is Useful — and Where It Stops

GRM's value is speed. It lets you scan a list of properties and quickly identify which ones have income potential that's even worth evaluating further. That's a meaningful time-saver when you're comparing multiple opportunities across different Phoenix neighborhoods.

But GRM has a hard limit: it tells you nothing about expenses. Property taxes, insurance, property management, maintenance, and vacancy all affect what a property actually puts in your pocket — and none of that is captured in GRM. Two properties with the same GRM can have very different net operating incomes depending on how the expenses stack up.

That's why GRM works best as a first filter. Once a property clears that screen, the deeper analysis — NOI, cap rate, cash-on-cash return, and DSCR — is what tells you whether it's actually a good investment.

If you'd like help screening Phoenix properties or want to understand how GRM fits into a full investment analysis, I'd be happy to walk through the numbers with you.

Thinking about buying an investment property in Arizona?
Before you make an offer, I'll provide a professional underwriting analysis so you can understand the property's cash flow, appreciation potential, financing impact, and long-term return. Send me the address, and I'll review it with you — [email protected].

Brian Harris  |  Investor-Friendly Real Estate Advisor  |  Dream Source Real Estate
📍 Serving Phoenix, Scottsdale, Glendale, Peoria, Mesa, Chandler & surrounding areas
📞 602-684-0198   📧 [email protected]   🌐 azdreamsource.com