Property Valuation
The gross rent multiplier (GRM) method of valuation is calculated as:
ANet Operating Income ÷ Cap Rate
BPurchase Price ÷ Gross Annual Rent✓ Correct
CGross Annual Rent × Operating Expenses
DSale Price − Land Value
Explanation
The Gross Rent Multiplier = Purchase Price ÷ Gross Annual (or Monthly) Rent. To estimate value using GRM: Value = GRM × Gross Annual Rent. It is a quick estimation tool but less precise than a full income approach since it does not account for operating expenses.
Related Illinois Property Valuation Questions
- When an appraiser reports a property's value 'as of' a specific date, they are providing:
- What is 'contributory value' versus 'cost' of an improvement in real estate appraisal?
- What is 'excess land' versus 'surplus land' in real estate appraisal?
- In Illinois property tax assessment, the phrase '33.3% of fair market value' (one-third) refers to:
- In Illinois, mass appraisal (used by county assessors) differs from individual property appraisal in that:
- An Illinois property has a net operating income of $48,000 per year and comparable properties are selling at a capitalization rate of 8%. What is the estimated value?
- Physical deterioration that is 'incurable' in an appraisal means:
- What is 'yield capitalization' (discounted cash flow analysis) versus 'direct capitalization'?
Practice More Illinois Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Illinois Quiz →