Definition
A building's price divided by its annual gross income: a quick ratio for comparing plexes, but one that ignores expenses entirely.
The formula
GRM = purchase price ÷ annual gross income, meaning all rents over 12 months (a vacant unit counted at market rent) plus other income such as parking or laundry.
Example: a $900,000 triplex whose rents total $4,500 a month, or $54,000 a year, has a GRM of 16.7. It costs 16.7 times its gross income.
Its limits
The lower the GRM, the less you pay for each dollar of rent. It's handy for sorting listings in the same neighbourhood, but the ratio ignores expenses: two plexes with the same GRM can have very different taxes, heating or condition. For that, look at net operating income and the cap rate.
Check the rents too: only those written in the leases count, and a future increase isn't guaranteed, since the tenant can refuse it, and the rent is then fixed by the Tribunal administratif du logement (TAL) at your request. The plex return calculator gives the GRM along with the other ratios.
Learn more
Glossary terms
Official sources
General information, not legal advice
This page summarizes the rules in force in Québec on the update date shown, for information only. It does not replace advice from a lawyer, notary or accountant, nor the official texts: when in doubt, rely on the sources above and on the Tribunal administratif du logement.