Property Valuation
What is the 'income multiplier' approach and how is it used as a quick investment analysis tool in Hawaii?
AA. A complex calculation requiring certified appraiser certification
BB. A quick valuation method dividing purchase price by annual or monthly income to assess relative value; useful for quickly comparing investment properties but less precise than cap rate analysis✓ Correct
CC. A government-required analysis for all residential rental properties in Hawaii
DD. An analysis of income tax multipliers affecting Hawaii real estate investment returns
Explanation
Income multipliers (GRM, gross income multiplier) provide quick investment benchmarks. A monthly GRM of 180 or annual GRM of 15 means the property costs 180 months or 15 years of gross rent. Lower multipliers indicate better value relative to income. While useful for quick screening, multipliers don't account for operating expenses, so cap rate analysis is more comprehensive.
Related Hawaii Property Valuation Questions
- When a Hawaii appraiser uses the cost approach for a 30-year-old home, they must account for which type of depreciation most significantly?
- Which type of property typically requires the income approach as the primary method of valuation?
- In Hawaii, when calculating the income approach for a hotel, the appraiser typically uses which income measure?
- What is a 'real estate market analysis' in the context of property valuation, distinct from an appraisal?
- In the cost approach to value, what is 'accrued depreciation'?
- In Hawaii, the 'income multiplier' method for valuing a small rental property divides the property value by:
- A Hawaii rental property has a net operating income of $60,000. If the cap rate is 5%, what is the indicated value?
- In Hawaii's competitive resort market, which factor would most likely increase a property's market value?
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