A rental house sold for $396,000 and rents for $2,200 a month. Its monthly gross rent multiplier is:
Correct Answer
C) 180
Why this is correct: The monthly Gross Rent Multiplier (GRM) is Sale Price ÷ Monthly Rent. Here, $396,000 ÷ $2,200 = 180. Why the other choices are wrong: '15, the ratio expressed in years of rent' would result if you mistakenly used annual rent ($26,400) and then divided by 12. '225, using the annual rent by mistake' is $396,000 ÷ $26,400 = 15, then perhaps mislabeled. '165, after deducting typical vacancy first' incorrectly modifies the rent; GRM uses gross rent without vacancy or expense deductions. Exam tip: GRM is a crude tool; always ensure the rent basis (monthly vs. annual) is consistent between the subject and comparables.
Why This Is the Correct Answer
Why this is correct: The monthly Gross Rent Multiplier (GRM) is Sale Price ÷ Monthly Rent. Here, $396,000 ÷ $2,200 = 180. Why the other choices are wrong: '15, the ratio expressed in years of rent' would result if you mistakenly used annual rent ($26,400) and then divided by 12. '225, using the annual rent by mistake' is $396,000 ÷ $26,400 = 15, then perhaps mislabeled. '165, after deducting typical vacancy first' incorrectly modifies the rent; GRM uses gross rent without vacancy or expense deductions. Exam tip: GRM is a crude tool; always ensure the rent basis (monthly vs. annual) is consistent between the subject and comparables.
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A house sold for $438,000 with monthly rent of $2,400. The monthly gross rent multiplier is:
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When analyzing income and expense data for a multi-tenant office building to develop an opinion of market value, an appraiser includes revenue from parking fees collected by the owner. In the appraiser's income and expense analysis, these parking fees should be treated as part of: