Property Valuation
Gross Rent Multiplier (GRM) is calculated by:
ADividing annual NOI by the cap rate
BDividing the sale price by the gross monthly or annual rent✓ Correct
CMultiplying net income by the number of units
DSubtracting vacancy from potential gross income
Explanation
GRM = Sale Price / Gross Rent. For example, a West Virginia rental property selling for $120,000 with gross monthly rent of $1,000 has a monthly GRM of 120. GRM is a quick valuation tool for small income properties.
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