The GRM is the easiest to calculate, as well as the least informative number you’ll hear when evaluating commercial real estate. If you know the asking or selling price of a property as well as the annual maximum income that can be generated from the current leases, you can calculate the GRM.

The Cap Rate uses the Net Operating Income, or NOI, as its starting place. Since the NOI reflects vacancies, losses and expenses, and also adds in other income as from an on-site laundry, it’s a much better reflection of the actual operation of the property.