A property is listed for $275,000 and generates monthly gross rent of $2,200. What is the Gross Rent Multiplier (GRM)?
Correct Answer
B) 125
The Gross Rent Multiplier (GRM) is calculated by dividing the property's sale price by its monthly gross rent: $275,000 ÷ $2,200 = 125. GRM is used as a quick tool to compare the relative value of income-producing properties.
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Related Topics & Key Terms
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Related Concepts
Area calculation involves determining the square footage or acreage of a property using geometric formulas. Key conversions: 1 acre = 43,560 square feet, 1 mile = 5,280 feet, 1 section = 640 acres.
Daily rate calculation involves determining the cost or income per day by dividing the total amount by the number of days in the period (usually a year or a month). This is a fundamental step in proration.
The capitalization rate (cap rate) is the ratio of a property's net operating income to its sale price, expressed as a percentage. It is used to estimate value and compare profitability of investment properties. Cap Rate = NOI / Value.
More Real Estate Math Questions
An income-producing property generates a net operating income (NOI) of $35,000 annually. Using a capitalization rate of 7%, what is the estimated value of the property?
A property sells for $275,000 with a 6% commission rate. What is the total commission earned?
A property sells for $245,000 with a total commission rate of 6%. What is the total commission earned?
A property generates a net operating income (NOI) of $30,000 per year. Using a capitalization rate of 6%, what is the estimated property value?
A lender uses a 28% front-end qualifying ratio. If a borrower's gross monthly income is $4,800, what is the maximum allowable monthly housing payment?
- → A borrower takes out an interest-only loan of $180,000 at an annual interest rate of 5%. What is the interest due for the first month?
- → Annual property taxes on a home are $2,400. The property closes on June 1. Using a 360-day banker's year and assuming taxes are paid in arrears, what is the amount the seller owes the buyer as a tax proration credit?
- → A buyer purchases a home for $200,000 and makes a 15% down payment. What is the loan amount?
- → A property is assessed at $190,000 with a mill rate of 20. What is the annual property tax?
- → A property sells for $220,000 and generates monthly gross rent of $1,600. What is the Gross Rent Multiplier (GRM)?
- → A property is purchased for $175,000 and appreciates at 4% per year compounded annually. What is the property's value after 2 years?
- → A property sells for $280,000. The listing broker charges a 3% commission and the buyer's broker charges 2.5%. The selling agent receives 65% of the buyer's broker commission. What does the selling agent earn?
- → A buyer purchases a home for $258,000 with a 20% down payment. What is the amount of the mortgage loan?
- → Annual property taxes are $3,600. The property closes on July 1 and taxes are paid in arrears. Using a 360-day year (30 days per month), what is the seller's proration debit (amount the seller owes the buyer at closing)?
- → A borrower takes out a $250,000 mortgage at a 5% annual interest rate. What is the interest portion of the first month's payment?
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