Property Valuation
The Gross Rent Multiplier (GRM) is calculated by:
ADividing NOI by the cap rate
BDividing the sale price by the monthly gross rental income✓ Correct
CMultiplying the annual rent by the vacancy rate
DDividing the annual NOI by the sale price
Explanation
GRM = Sale Price ÷ Monthly Gross Rent. For example, a property selling for $600,000 with $4,000/month gross rent has a GRM of 150. GRM is a quick valuation tool but does not account for operating expenses or vacancy.
Related California Property Valuation Questions
- The economic principle of 'plottage' refers to:
- What is 'market value'?
- External obsolescence (economic obsolescence) is caused by:
- External obsolescence (economic obsolescence) differs from other depreciation types because it is:
- Functional obsolescence differs from physical deterioration in that it results from:
- The principle of substitution states that:
- The 'highest and best use' of a property is defined as the use that meets all four of which criteria?
- The income approach to value is most commonly used for:
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