Property Valuation
The gross rent multiplier (GRM) is calculated as:
ASale price divided by monthly gross rent✓ Correct
BMonthly gross rent divided by sale price
CNet operating income divided by sale price
DSale price divided by net operating income
Explanation
GRM = Sale Price ÷ Monthly Gross Rent. It is a quick valuation tool for residential rental properties. For example, if a home sells for $180,000 and rents for $1,500/month, the GRM is 120.
Related Arkansas Property Valuation Questions
- Market value is best defined as:
- The principle of contribution states that the value of an improvement is measured by:
- A comparable home sold for $200,000. It has a garage worth $10,000 that the subject property lacks. The adjusted sale price of the comparable is:
- A property generates a net operating income of $30,000 per year. Using a capitalization rate of 6%, what is the indicated value?
- The principle of substitution states that a buyer will not pay more for a property than:
- An overimprovement to a property is one where:
- A cap rate of 5% versus a cap rate of 10% on the same NOI would indicate:
- The gross rent multiplier (GRM) is calculated by:
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