A house sold for $438,000 with monthly rent of $2,400. The monthly gross rent multiplier is:
Correct Answer
D) 182.5
Why this is correct: The Monthly Gross Rent Multiplier (MGRM) is Sale Price divided by Monthly Rent. Calculation: $438,000 ÷ $2,400 = 182.5. Why the other choices are wrong: '18.25, misplacing a decimal place' results from $438,000 ÷ $24,000 (using annual rent incorrectly). '15.2, using annual rent instead' is the Annual GRM: $438,000 ÷ ($2,400 × 12) = $438,000 ÷ $28,800 ≈ 15.2. '1,051, multiplying rather than dividing' results from $438,000 ÷ $416 (or similar miscalculation). Exam tip: GRM = Price / Rent. Be consistent: Monthly Rent → Monthly GRM; Annual Rent → Annual GRM.
Why This Is the Correct Answer
Why this is correct: The Monthly Gross Rent Multiplier (MGRM) is Sale Price divided by Monthly Rent. Calculation: $438,000 ÷ $2,400 = 182.5. Why the other choices are wrong: '18.25, misplacing a decimal place' results from $438,000 ÷ $24,000 (using annual rent incorrectly). '15.2, using annual rent instead' is the Annual GRM: $438,000 ÷ ($2,400 × 12) = $438,000 ÷ $28,800 ≈ 15.2. '1,051, multiplying rather than dividing' results from $438,000 ÷ $416 (or similar miscalculation). Exam tip: GRM = Price / Rent. Be consistent: Monthly Rent → Monthly GRM; Annual Rent → Annual GRM.
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Previous Question
A property's income stream includes $85,000 in base rents and an estimated $15,000 in reimbursements for property taxes and insurance from tenants (recoveries). Market research indicates a vacancy and collection loss of 8% is typical for similar properties. What is the estimated effective gross income?
Next Question
A rental house sold for $396,000 and rents for $2,200 a month. Its monthly gross rent multiplier is: