In Arizona, the 'effective gross income multiplier' (EGIM) is more useful than the GRM because:
Why EGIM accounts for vacancy and collection loss while GRM uses only potential gross income Is Correct
Answer A: EGIM accounts for vacancy and collection loss while GRM uses only potential gross income
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 income property generates gross rents of $90,000 per year. Vacancy and credit losses are 5%, and operating expenses are $35,000. What is the Net Operating Income (NOI)?Property Valuation
- An Arizona property has a potential gross income of $108,000, a 6% vacancy rate, and $36,000 in operating expenses. If properties in the area sell at a 7.5% cap rate, what is the estimated value?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
- 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
- A 6-unit apartment building rents for $1,400/month per unit. Expenses are 38% of effective gross income. The vacancy rate is 5%. At a 7.5% cap rate, what is the value?Real Estate Math
- 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
- An Arizona residential appraiser uses the sales comparison approach and finds the subject property has a pool that no comparable sale has. The appraiser should:Property Valuation
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.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
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.
Math Concepts
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 →