Real Estate Math
A Kentucky duplex generates $1,100/month per unit. If the gross rent multiplier for the area is 140, what is the estimated value?
A$154,000
B$308,000✓ Correct
C$184,800
D$369,600
Explanation
Total monthly gross rent = 2 units x $1,100 = $2,200. Value = Monthly gross rent x GRM = $2,200 x 140 = $308,000.
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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.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Math Concepts
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