Real Estate Math
A Portland rental house has an annual gross income of $36,000. The gross rent multiplier (GRM) for comparable properties is 14. What is the indicated value?
A$504,000✓ Correct
B$450,000
C$540,000
D$432,000
Explanation
Value = GRM × Gross Annual Rent = 14 × $36,000 = $504,000. The Gross Rent Multiplier is a quick valuation tool that compares sale prices to gross annual (or monthly) rents. It does not account for vacancies or expenses, so it is less precise than a full income approach using NOI and cap rates.
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