A gross rent multiplier (GRM) is calculated by dividing the:
Why Sale price by the monthly gross rent Is Correct
Answer B: Sale price by the monthly gross rent
Exam Tip: Property Valuation
Valuation questions focus on the three approaches to value: sales comparison, cost, and income. Know which approach is best for which property type. The income approach uses cap rate and NOI — memorize these formulas.
Key Property Valuation Terms in This Question
People Also Study
Related Arizona Questions
- An Arizona rental property generates $2,400 per month in rent. The gross rent multiplier (GRM) for comparable properties is 135. What is the estimated value?Real Estate Math
- A property manager manages 40 units at $950/month average rent. The vacancy rate is 7.5%. What is the effective gross monthly income?Real Estate Math
- In Arizona, the 'gross income multiplier' (GIM) at the annual level is used differently from the GRM (gross rent multiplier) in that:Property Valuation
- The 'gross rent multiplier' (GRM) method for quick valuation of a rental property uses:Property Valuation
- A property in Arizona has a gross rent multiplier (GRM) of 120 and rents for $1,800 per month. What is the estimated value using the GRM method?Property Valuation
- Gross Rent Multiplier (GRM) is calculated as:Property Valuation
- An Arizona rental property is purchased for $280,000. Annual gross rent is $26,400. What is the gross rent multiplier (using annual income)?Real Estate Math
- A property generates $36,000 annual gross rent. The vacancy and credit loss is 5%. What is the effective gross income (EGI)?Real Estate Math
Key Terms to Know
A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Net Operating Income (NOI)The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Study This Topic
Practice More Arizona Real Estate Questions
1,400+ questions covering all exam topics. Start free — no signup required.
Take the Free Arizona Quiz →