Real Estate Math
An investor in Kailua pays $1,100,000 for a single-family home and rents it for $4,500/month. What is the annual gross rent multiplier (using annual rent)?
AA. 20.4✓ Correct
BB. 24.4
CC. 22.4
DD. 18.4
Explanation
Annual gross rent = $4,500 × 12 = $54,000. Annual GRM = Purchase Price / Annual Gross Rent = $1,100,000 / $54,000 = 20.37 ≈ 20.4. GRM is a quick valuation metric; lower GRM indicates better value relative to rental income.
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