Property Valuation
In West Virginia, the gross rent multiplier (GRM) is calculated as:
AAnnual NOI ÷ sale price
BSale price ÷ monthly gross rent✓ Correct
CMonthly rent × 12 ÷ annual expenses
DSale price ÷ annual gross rent
Explanation
GRM = Sale price ÷ Monthly gross rent. It provides a quick ratio for comparing income properties.
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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.
Net Operating Income (NOI)The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
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.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Math Concepts
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