Property Valuation
The gross rent multiplier (GRM) is calculated by:
ADividing NOI by the cap rate
BDividing sale price by monthly gross rent✓ Correct
CMultiplying annual rent by the occupancy rate
DDividing gross rent by operating expenses
Explanation
GRM = Sale Price ÷ Monthly Gross Rent. Example: $200,000 price ÷ $1,600/month rent = GRM of 125.
People Also Study
Related Arkansas Questions
- A property's Gross Rent Multiplier (GRM) is calculated by dividing the:Property Valuation
- An investor purchases a duplex for $220,000 generating $2,200/month gross rent. What is the gross rent multiplier (GRM)?Real Estate Math
- The gross rent multiplier (GRM) is calculated as:Property Valuation
- A property generates monthly gross rents of $2,500. The gross rent multiplier is 110. What is the estimated property value?Real Estate Math
- A building has 8,000 square feet of rentable space. The monthly rent is $12 per square foot per year. What is the annual gross income?Real Estate Math
- A commercial property generates a monthly gross rent of $8,500. Vacancies and credit losses run 5%. What is the annual Effective Gross Income?Real Estate Math
- The 'effective gross income multiplier' (EGIM) is calculated by:Property Valuation
- A property that sells for $280,000 and has a monthly gross rent of $2,000 has a GRM of:Property Valuation
Key Terms to Know
Gross Rent Multiplier (GRM)
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 Arkansas Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Arkansas Quiz →