Real Estate Math
A Pennsylvania rental property has a purchase price of $250,000 and generates $22,500 annual gross rent. What is the GRM (using annual rent)?
A9.1
B11.1✓ Correct
C8.9
D10
Explanation
GRM (annual) = Sale Price ÷ Annual Gross Rent = $250,000 ÷ $22,500 = 11.11. A GRM of 11 means the investor will recoup the purchase price in approximately 11 years of gross rent (before expenses). Lower GRMs generally indicate better relative value for investment properties.
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