86. A salesperson has the opportunity to list a 6-plex that is 100% rented. If the salesperson does NOT want to account for any expenses, the numerical tool used to predict the price at which the building will sell is known as
Answer: C
The numerical tool used to predict the price at which the building will sell is known as the gross rent multiplier (GRM).
The gross rent multiplier (GRM) is a metric that helps determine the value of an income-producing property based solely on its gross rental income, without considering expenses.
A) net rent multiplier (NRM)
The net rent multiplier (NRM) is not applicable in this context, as it takes into account the net operating income after expenses, which is contrary to the question's stipulation of not accounting for any expenses.
B) return on investment (ROI)
Return on investment (ROI) is a financial metric that evaluates the profitability of an investment, considering both income and expenses. It does not serve as a direct tool for predicting property selling price based solely on rental income.
C) gross rent multiplier (GRM)
The gross rent multiplier (GRM) is the correct option because it directly relates the property's price to its gross rental income, allowing for an estimation of the selling price without factoring in expenses.
D) gross income multiplier (GIM)
The gross income multiplier (GIM) is similar to the GRM but includes all income generated by the property, not just rent. Therefore, it is not suitable for this scenario where the focus is strictly on rental income.
Conclusion
The gross rent multiplier (GRM) is the definitive tool for estimating property values based solely on gross rental income, making it the appropriate choice for this question. All other options either incorporate expenses or measure different financial metrics, thus failing to meet the criteria specified.