Property Valuation
What is the 'income multiplier' method most useful for in Idaho commercial real estate?
AAppraising vacant land
BQuickly estimating value for income-producing properties by multiplying income by an appropriate multiplier✓ Correct
CCalculating depreciation
DDetermining homestead exemption amounts
Explanation
Income multipliers (GRM, GIM) provide quick value estimates for income-producing properties by multiplying gross income by a market-derived multiplier. They are useful for preliminary analysis but less precise than direct capitalization.
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Key Terms to Know
Gross Rent Multiplier (GRM)
A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
DepreciationA reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
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.
Math Concepts
State-Specific Concepts
Homestead Exemption
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