Gross Rent Multiplier Calculator

Gross rent multiplier is price divided by annual gross rent. It is deliberately crude — it ignores running costs entirely — and that is what makes it useful as a first filter when you are looking at a long list of properties and want to know which three are worth a proper analysis.

A lower multiplier means more rent for the price. Because it uses gross rent, it flatters properties with heavy running costs, so anything that survives this screen still needs a cap rate and a cash flow projection before you offer.

The formula

Gross rent multiplier = price ÷ (monthly rent × 12). Read the other way, the most you should pay is annual rent × your target multiplier. The multiplier also happens to be the number of years of gross rent it would take to repay the price.

Worked example

A property at 400,000 renting for 2,333 a month collects 27,996 a year, giving a multiplier of about 14.3. If your rule is never to pay more than 12 times gross rent, the most you should offer is 27,996 × 12 = about 336,000 — so this listing fails the screen by roughly 64,000.

Use it only to sort, never to decide

Because it ignores costs, two properties with the same multiplier can behave completely differently: one with a service charge, an old roof and high local taxes will produce far less than an identical building without them. Treat the multiplier as a way to decide what deserves a full analysis.

Frequently asked questions