A property has an annual gross income of $60,000 and a GRM of 10 (annual). What is the estimated value?
Why $600,000 Is Correct
Answer B: $600,000
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.
People Also Study
Related California Questions
- A property generates annual gross rent of $96,000. If comparable properties sell at a GRM of 12 (annual), what is the estimated property value?Real Estate Math
- A property has an annual gross income of $120,000 and operating expenses of $48,000. Using a capitalization rate of 6%, what is the property's estimated value?Real Estate Math
- A property's effective gross income is $108,000 per year. Operating expenses are $42,000. At a 7% cap rate, what is the estimated value?Real Estate Math
- A property generates annual rental income of $96,000. An appraiser uses a gross rent multiplier (GRM) of 13 to estimate value. What is the indicated value?Property Valuation
- The monthly rent on a property is $2,400. The gross rent multiplier (annual) for comparable properties is 14. What is the estimated property value?Real Estate Math
- A property generates an NOI of $60,000. Comparable properties sell at a 5% cap rate. What is the indicated value using the income approach?Property Valuation
- A gross lease for a commercial unit requires the tenant to pay $3,000 per month. The landlord pays all operating expenses, which total $900 per month. What is the landlord's effective net income from this lease per month?Property Management
- A property generates a net operating income of $50,000 and is valued using a 5% cap rate. What is the estimated value?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.
Net Operating Income (NOI)The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
Math Concepts
Study This Topic
Practice More California Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free California Quiz →