Property Valuation
An Iowa investor wants to compare two rental properties using the gross rent multiplier. Property A: $240,000 price, $1,800/mo rent. Property B: $310,000 price, $2,200/mo rent. Which is the better value?
AProperty A (GRM 133.3)✓ Correct
BProperty B (GRM 140.9)
CThey are equal
DCannot be determined from GRM alone
Explanation
GRM for A = $240,000 ÷ $1,800 = 133.3. GRM for B = $310,000 ÷ $2,200 = 140.9. A lower GRM generally indicates better value, so Property A appears to be the better value based on GRM alone.
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