Home · Resource Center · Yield vs GRM
Rental yield and gross rent multiplier are the same two numbers written in opposite directions. Yield asks how much rent you collect per dollar of price. GRM asks how many years of rent the price represents. Neither one is a profit test.
By RentalAnalytics Editorial Team · Published September 14, 2026
Gross rental yield is annual scheduled rent divided by purchase price. A $20,000 rent roll on a $400,000 purchase is a 5% gross yield. Net yield replaces rent with NOI, so it is a different metric and needs expenses.
Gross rent multiplier is the inverse screen. As JPMorgan's commercial term lending group puts it, "the GRM is the ratio of an investment property's market value to the annual gross rent it generates."[1] The same $400,000 price and $20,000 rent produce a GRM of 20.
This post is the comparison, not another GRM definition. The formula walkthrough and the "lower is not always better" discussion live in gross rent multiplier explained. Here the job is to keep yield and GRM from being treated as two independent truths.
Divide 1 by the decimal yield to get GRM. Divide 1 by GRM to get yield. A 0.08 gross yield is a GRM of 12.5. A GRM of 16 is a 6.25% gross yield. The pair only inverts if both sides use the same price and the same annual rent.
gross_yield = annual_gross_rent / price
grm = price / annual_gross_rent
gross_yield = 1 / grmPeople get this wrong when they mix monthly rent into one side and annual rent into the other, or when they swap list price for all-in basis on only one ratio. Write both formulas with annual rent and the same denominator before you rank a list.
They look expensive on a gross screen, and they still are not a deal underwrite. The National Association of Realtors put the U.S. median existing-home price at $434,100 in July 2026.[2] Census Bureau data analyzed by USAFacts put national median monthly rent at about $1,487 in 2024, or $17,844 a year.[3]
| Input | National blend | As GRM | As gross yield |
|---|---|---|---|
| Median price / median rent | $434,100 and $17,844 | 24.3 | 4.1% |
That row mixes every home sold with every rental rented. It is a worked inversion, not a typical investor return and not a metro forecast. A listing in a cheaper price-to-rent pocket can clear a much lower GRM on its own rent roll. A listing in a high-price metro can sit near that national blend and still be the local going rate.
Every operating cost, vacancy, and the loan. JPMorgan is direct: "the 'gross' in GRM means it includes all rent payments without any deductions. The formula doesn't factor in a property's operating expenses."[1] The same sentence applies to gross yield. Two properties with a 6% gross yield can have opposite NOI if one has cheap taxes and the other has coastal insurance.
Census and HUD's Rental Housing Finance Survey found mean total operating expenses of $6,194 per year for one-unit rentals in 2020, about $516 a month, excluding debt service and capital improvements.[4] That vintage figure is a sanity check, not a 2026 line item. If your yield screen never subtracts a number in that neighborhood, you are ranking rent-to-price, not profit.
Vacancy is the other missing piece. The Census Housing Vacancy Survey put national rental vacancy at 7.3% in the second quarter of 2026.[5] Gross yield and GRM assume the scheduled rent is collected. Effective yield starts after vacancy.
From in-place rent if the unit is leased, or from a statistical median plus comps if it is vacant. On RentalAnalytics, estimated market rent is a HUD FY2026 50th-percentile plus Census ACS blend. HUD states that the 50th-percentile figures are not Fair Market Rents.[6] ACS B25031 is median gross rent by bedrooms at the ZCTA, with a margin of error, and it is an occupied-unit median rather than asking rent.[7]
The rent estimator runs that HUD 50th-scaled ZIP estimate and shows FMR beside it as the 40th / voucher number. Do not drop FMR into the yield formula and call the result market yield. A 40th-percentile voucher schedule will systematically understate a median rent and make yield look weaker, or make GRM look higher, than a 50th-percentile plus ACS estimate.
Use whichever framing matches the list you are sorting. Yield is easier to set next to a cap rate or a loan rate because it is already a percentage. GRM is easier when you are talking payback years with other investors who already quote multipliers. They should never disagree if the inputs match.
Stop at the screen. JPMorgan's own guidance is that GRM "shouldn't be the final step in an investor's analysis."[1] The next step is NOI and cap rate, then cash flow if there is a loan. The cap rate calculator is that second step on this site. Pair it with the operating expense ratio walkthrough if you want the expense identity in prose. This article is education on two screening ratios. It is not a claim that any yield or GRM is typical, safe, or accurate for a specific address.
Gross rental yield is annual rent divided by price. Gross rent multiplier is price divided by annual rent. They use the same two inputs and are mathematical inverses. A 5% gross yield is a GRM of 20. Neither ratio subtracts vacancy or operating expenses.
A higher gross yield means rent is larger relative to price. That is a shorter gross payback, not proof of profit. A high yield can also mark deferred maintenance, a weak location, or a rent figure that will not survive comps. Convert yield to NOI before you rank deals.
Divide 1 by the decimal yield. A 0.05 gross yield is a GRM of 20. Divide 1 by GRM to get yield: a GRM of 12.5 is an 8% gross yield. Use the same annual rent and the same price in both formulas or the pair will not invert.
Not as market rent. FMR is a 40th-percentile voucher schedule. For a statistical median, use HUD 50th-percentile rents blended with Census ACS, then confirm with local comps. Keep FMR labeled as the 40th / voucher number on the side.
As soon as a listing survives the first sort. Yield and GRM ignore expenses. Cap rate uses NOI, so taxes, insurance, vacancy, and maintenance can change the rank. Use a cap rate calculator on the shortlist instead of picking the highest yield.
More on RentalAnalytics → all articles · all tools · city reports