Real Estate Math
A Nevada investor purchases a rental property for $280,000. The annual rent is $28,800. What is the gross rent multiplier (GRM)?
A9.72✓ Correct
B10.28
C8.5
D11.6
Explanation
GRM = Purchase Price ÷ Annual Gross Rent = $280,000 ÷ $28,800 = 9.72. The Gross Rent Multiplier is a quick valuation tool used by investors to compare properties. A lower GRM generally indicates better value (more income relative to price). In the Las Vegas rental market, GRMs typically range from 8 to 15 depending on neighborhood and property type. GRM does not account for expenses — it's a preliminary screening tool.
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