Real Estate Math
A Virginia duplex rents for $1,600/month per unit. What annual gross rent multiplier would a buyer at $350,000 be paying?
A9.1
B10.9✓ Correct
C11.5
D12.3
Explanation
Annual rent = 2 × $1,600 × 12 = $38,400. Annual GRM = $350,000 ÷ $38,400 = 9.
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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.
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.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
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