Property Valuation
What is 'Gross Rent Multiplier' (GRM) and how is it calculated?
AAnnual NOI divided by sale price
BSale price divided by gross annual (or monthly) rent — a quick indicator of value relative to rent✓ Correct
CMonthly rent multiplied by 12
DVacancy rate multiplied by gross income
Explanation
GRM is a quick valuation tool: GRM = Sale Price ÷ Gross Rent. To estimate value: Estimated Value = Gross Rent × GRM. It does not account for expenses, making it less precise than full income capitalization, but useful for quick comparisons among similar properties.
Related California Property Valuation Questions
- The principle of progression in real estate means:
- The income approach to value is most appropriate for:
- Plottage value refers to the increased value resulting from:
- A property has a GPI of $120,000, 5% vacancy and credit loss, and operating expenses of $45,000. What is the NOI?
- An appraiser uses the 'before and after' method when appraising property affected by:
- In the income approach to valuation, Net Operating Income (NOI) is calculated as:
- The 'effective age' of a building used in appraisal is best defined as:
- Plottage value (assemblage) occurs when:
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