ValuationIncome ApproachMEDIUM
In South Dakota, a gross rent multiplier (GRM) is calculated by dividing the:
Correct Answer
B) Sale price by the gross annual or monthly rent
GRM = Sale Price ÷ Gross Rent. The gross rent multiplier is a quick screening tool for comparing income properties. A lower GRM may indicate a better investment relative to rental income.
Answer Options
A
Net operating income by the sale priceB
Sale price by the gross annual or monthly rentC
Gross rent by the property taxesD
Operating expenses by the gross rentWhy This Is the Correct Answer
Sign up free to unlock full analysis
Why the Other Options Are Wrong
Sign up free to unlock full analysis
Deep Analysis of This Valuation Question
Sign up free to unlock full analysis
Background Knowledge for Valuation
Sign up free to unlock full analysis
Sign up free to unlock full analysis
Real World Application in Valuation
Sign up free to unlock full analysis
Common Mistakes to Avoid on Valuation Questions
Sign up free to unlock full analysis
Related Topics & Key Terms
Related Topics:
cap-rateincome-approachinvestment-analysisquick-screening
Key Terms:
GRMgross rent multiplierprice over rentscreening toolnot NOI
Was this explanation helpful?
More Valuation Questions
The appraisal principle of substitution states that:
Physical deterioration, functional obsolescence, and external obsolescence are the three types of:
Highest and best use means the use that is:
In the sales comparison approach, adjustments are always made to the:
The sales comparison approach to appraisal is most commonly used for which type of property?
- → Which formula best represents the cost approach to appraisal?
- → Which appraisal method is most commonly used for residential properties and relies on recent sales of comparable properties?
- → The sales comparison approach to appraisal is most commonly used for which type of property?
- → The sales comparison approach to appraisal is most appropriate for which type of property?
- → A West Virginia property with 4 bedrooms but only 1 bathroom suffers from:
- → A Comparative Market Analysis (CMA) is best described as:
- → James owns a farm in rural Tennessee that qualifies for the Greenbelt Law. Under Tennessee's Greenbelt Law, how is agricultural land assessed for property tax purposes?
- → Which of the following correctly identifies the three types of depreciation recognized in real estate appraisal?
- → Which four criteria must a use satisfy to qualify as the highest and best use of a property?
- → Highest and best use: