If the gross multiplier is 6 and the gross income is $40,000, what is the property value using the GRM method?

If the gross multiplier is 6 and the gross income is $40,000, what is the property value using the GRM method?

• A. $240,000
• B. $320,000
• C. $200,000
• D. $280,000

Answer: (A)

The Gross Rent Multiplier (GRM) method estimates value by applying a multiplier to the annual gross income. The idea is simple: the property’s value is roughly proportional to the income it produces before expenses. You multiply the annual gross income by the GRM to get the estimated value. Here, the gross income is $40,000 and the GRM is 6. Multiply 6 by 40,000 to get $240,000. This approach gives a quick, rough estimate and is most useful for comparing similar income-producing properties, since it doesn’t account for operating expenses, vacancies, or financing.

The Gross Rent Multiplier (GRM) method estimates value by applying a multiplier to the annual gross income. The idea is simple: the property’s value is roughly proportional to the income it produces before expenses. You multiply the annual gross income by the GRM to get the estimated value.

Here, the gross income is $40,000 and the GRM is 6. Multiply 6 by 40,000 to get $240,000. This approach gives a quick, rough estimate and is most useful for comparing similar income-producing properties, since it doesn’t account for operating expenses, vacancies, or financing.