Real Estate Math
A Montana investor buys a 4-plex for $320,000. Each unit rents for $850/month. The annual gross rent multiplier (GRM) of comparable properties is 8. Is this a good purchase based on GRM?
AYes, the property's GRM is below the market GRM indicating it is underpriced
BNo, the property's GRM exceeds the market GRM indicating it may be overpriced✓ Correct
CThe GRM cannot be calculated for a 4-plex
DGRM analysis is irrelevant for residential properties
Explanation
Annual gross rent = 4 units x $850 x 12 = $40,800. GRM = $320,000 / $40,800 = 7.
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