Approaches to value
Gross rent multiplier (GRM)
Sale price divided by gross rent, used as a quick comparison tool
A rough screening measure rather than a valuation method: it ignores expenses entirely, so two buildings with identical rents and very different operating costs produce the same multiplier.
How the exam asks about it
The GRM conventionally uses monthly rent and the gross income multiplier uses annual income. Reading which one is asked for is most of the item, since the two differ by a factor of twelve.
Related terms
Sitting the license exam? Find out what you actually know.
Free practice questions built to the published national content outline, with an explanation after every answer. No account, no paywall.
Independent exam preparation. Real Estate Exam Bank is not a state-approved pre-licensing course and completing anything here does not satisfy any state education requirement. Not affiliated with, endorsed by, or authorized by any state real estate commission, Pearson VUE, or PSI. Practice questions here are original study material, not the official exam.