California Real Estate SalespersonProperty Valuation and Financial AnalysisMedium
A rental home in a subject neighborhood rents for $1,800 per month. Comparable rental properties in the area indicate a market Gross Rent Multiplier (GRM) of 130. What is the estimated value of the subject property using the GRM method?
- A$180,000
- B$234,000
- C$210,000
- D$260,000
Show answer & explanationAnswer & explanation
Correct answer: B. $234,000
Value = Monthly Rent × GRM = $1,800 × 130 = $234,000.
Why the other options are wrong
- A. Incorrect multiplication result.
- C. Incorrect multiplication result.
- D. Incorrect multiplication result.
GRM Value Estimation
Value = Monthly Gross Rent × Gross Rent Multiplier (GRM), used as a quick income-based value estimate.
- GRM derived from comparable sales/rents
- Simple but doesn't account for expenses
- Formula: Value = Rent × GRM
Memory trick: Rent times Multiplier = Market price