Property Valuation
An appraiser uses the gross rent multiplier (GRM) method. If similar homes in Memphis sell for $150,000 and rent for $1,250/month, what is the GRM?
A100
B120✓ Correct
C125
D150
Explanation
GRM = Sales price ÷ Monthly rent = $150,000 ÷ $1,250 = 120. Using the values given ($150,000, $1,250), apply the appropriate formula..
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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.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
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.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
Math Concepts
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