Property Valuation
What is 'gross rent multiplier' (GRM) as used in Rhode Island investment property valuation?
AThe ratio of sale price to annual gross rents✓ Correct
BThe ratio of net operating income to sale price
CThe capitalization rate for commercial property
DThe vacancy rate for comparable rentals
Explanation
Gross Rent Multiplier (GRM) = Sale Price / Annual Gross Rents. It is a quick, simplified tool for valuing income properties. A lower GRM indicates better value relative to rents.
Related Rhode Island Property Valuation Questions
- The gross rent multiplier (GRM) is calculated as:
- An appraiser notes that a comparable sale in Providence included personal property (appliances) valued at $5,000. To use this sale as a comparable, the appraiser must:
- Capitalization rate (cap rate) is used in the income approach and is calculated as:
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