Property Valuation
Gross Rent Multiplier (GRM) is calculated by:
ADividing NOI by the cap rate
BDividing the sale price by the gross annual or monthly rent✓ Correct
CMultiplying the cap rate by property value
DDividing gross income by vacancy rate
Explanation
GRM = Sale Price ÷ Gross Rent. It is a quick, simple tool for estimating property value using gross (not net) rental income. Unlike the cap rate, it does not account for operating expenses.
Related California Property Valuation Questions
- The 'highest and best use' of a property is defined as the use that meets all four of which criteria?
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