Real Estate Math
An Oklahoma investor buys a duplex for $185,000. Monthly gross rent per unit is $900. What is the annual GRM for this property?
A8.6
B10.2
C7.31
D102.8✓ Correct
Explanation
Annual GRM = Purchase price / Annual gross rent. Annual gross rent = $900 x 2 units x 12 = $21,600.
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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.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
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.
Option ContractA contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
Math Concepts
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