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Valuation and Analysis, 14% of the examination

Gross rent multiplier (GRM)

Sale price divided by gross income, used as a quick comparison measure.

The GRM uses gross rent or gross income, never NOI. Divide a comparable property's sale price by its gross figure, then apply a market-supported multiplier to the subject's corresponding gross figure. Keep the period consistent: a monthly GRM uses monthly rent and an annual multiplier uses annual income. Because GRM ignores vacancy and operating-expense differences, it is a quick comparison tool rather than a complete income analysis.

See also

Capitalization rateAnnual net operating income divided by property value, expressed as a percentage. A cap rate is not total investment return.Net operating income (NOI)Effective gross income less operating expenses, before debt service and before depreciation.

Test the distinction

A relevant question from Valuation and Analysis, selected because its facts or explanation use this concept.

Valuation and Analysis · 14%Financial Analysis

A property sells for $960,000 and produces $80,000 in annual gross income. What is the gross income multiplier?

Written to DRE's published topic list. Not a real examination question, since reproducing those is a misdemeanor under B&P Code section 123.

Primary sources

Use these authorities when a course summary, forum answer, or older flashcard conflicts with the current California rule.

Where this is tested

Property Valuation and Financial AnalysisAll three official DRE valuation topics in one practical guide: value principles, the sales comparison, cost and income approaches, and the financial analysis that turns property data into a defensible answer.14%Practice Valuation and Analysis28 questions on this area, every option explained.Practice

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