Property Valuation
What is the 'gross rent multiplier' (GRM) method of property valuation?
ADividing net operating income by cap rate
BDividing the property sale price by the gross monthly (or annual) rent✓ Correct
CMultiplying replacement cost by depreciation factor
DDividing gross income by vacancy rate
Explanation
The GRM is calculated by dividing the property's sale price by its gross monthly (or annual) rental income. It provides a quick comparison metric for income properties. Unlike the cap rate method, it does not account for expenses.
Related Idaho Property Valuation Questions
- In the sales comparison approach, what is a 'negative adjustment' to a comparable sale?
- The principle of substitution states that a buyer will pay no more for a property than:
- Functional obsolescence is a loss in value caused by:
- Physical deterioration in an appraisal refers to:
- Effective age of a building refers to its:
- A comparable sale that closed 12 months ago in a rising market would require which type of adjustment?
- Gross rent multiplier (GRM) is calculated by dividing the:
- Which appraisal approach estimates value by calculating the cost to reproduce or replace a structure minus depreciation, plus land value?
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