An investor is valuing a small rental property listed at $600,000 that produces gross monthly rent of $2,900. What is the gross rent multiplier (GRM)?
Correct Answer
C) 17.24
GRM is calculated as price divided by gross monthly rent (or by annual rent, depending on convention). Here, dividing the $600,000 price by the $34,800 annual rent ($2,900 × 12) yields a GRM of 17.24.
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Related Topics & Key Terms
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Related Concepts
Converting a percentage to a decimal involves dividing the percentage value by 100.
In real estate, property value can be estimated by dividing the Net Operating Income (NOI) by the Capitalization Rate (Cap Rate).
Proration is the process of dividing expenses or income between the buyer and seller at the closing of a real estate transaction. This ensures each party pays or receives only their fair share based on the period of ownership.
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- → 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?
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- → 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)?
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