The gross rent multiplier (GRM) is calculated by dividing the:
Why Sale price by the annual or monthly gross rent Is Correct
Answer B: Sale price by the annual or monthly gross rent
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.
Key Property Valuation Terms in This Question
People Also Study
Related Colorado Questions
- An appraiser is valuing a rental property and estimates annual gross income of $60,000 with a vacancy and credit loss of 5% and operating expenses of $20,000. What is the net operating income (NOI)?Property Valuation
- In the income approach to value, the capitalization rate (cap rate) is calculated as:Property Valuation
- A Colorado investor purchases a fourplex for $600,000. Each unit rents for $1,400/month. What is the annual gross rent multiplier (GRM) using annual income?Real Estate Math
- Using the income approach: a Colorado commercial property generates $80,000 NOI. Comparable properties sell at a 7% cap rate. What is the property's indicated value?Real Estate Math
- The gross rent multiplier (GRM) for a small residential rental property in Colorado is calculated as:Property Valuation
- A Colorado property generates monthly gross rent of $3,500. Using a gross rent multiplier (GRM) of 140, what is the indicated market value?Real Estate Math
- A Colorado property has gross annual rents of $100,000. Operating expenses are $40,000. The cap rate is 8%. What is the market value?Real Estate Math
- A Colorado investment property generates an annual NOI of $45,000 and comparable properties are selling at a 6% cap rate. What is the indicated 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.
Study This Topic
Practice More Colorado Real Estate Questions
1,400+ questions covering all exam topics. Start free — no signup required.
Take the Free Colorado Quiz →