Property Valuation
The gross rent multiplier (GRM) method is used to quickly estimate the value of:
ACommercial office buildings
BResidential rental properties based on monthly rent✓ Correct
CAgricultural land based on crop yield
DLand values in urban areas
Explanation
The Gross Rent Multiplier (GRM) = Sale Price ÷ Monthly Gross Rent. To estimate value using GRM: Value = Monthly Gross Rent × GRM. It is most commonly used for small residential rental properties (1-4 units) as a quick comparative tool. For example, if similar properties sell for 120× monthly rent, a property renting for $1,500/month would be estimated at $180,000. GRM is less precise than a full income capitalization analysis.
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