Real Estate Math
A New Mexico property generates $4,000/month in gross rent. Using a GRM of 12, what is the estimated value?
A$48,000
B$240,000
C$480,000
D$576,000✓ Correct
Explanation
Annual gross rent = $4,000 × 12 = $48,000. Value = Annual Gross Rent × GRM = $48,000 × 10.. wait — GRM 12 here means GRM × monthly rent × 12: $4,000 × 12 (months) × 10 = .. Value = Annual Gross Income × GRM = $48,000 × 10 = $480,000. With GRM 12: $48,000 × 12 = $576,000.. actually GRM = Price / Annual Gross Income, so Value = Annual Income × GRM = $48,000 × 12 = $576,000. But if GRM is expressed as months: Value = Monthly Rent × GRM = $4,000 × 12 = $48,000 is price/month ratio. Most likely monthly GRM: $4,000 × 120 = .. The answer using annual GRM of 12: $48,000 × 12 = $576,000.
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