Question 70

A salesperson listing a 100% rented 6-plex without expenses uses gross rent multiplier (GRM).

The gross rent multiplier (GRM) is utilized to evaluate the value of a rental property based on its gross rental income. In this case, since the property is fully rented and expenses are not considered, GRM provides a straightforward method for assessing its market value.

A) net rent multiplier (NRM).

The net rent multiplier (NRM) accounts for net income rather than gross income, which includes expenses. Since the question specifies that expenses are not considered, NRM is not applicable in this scenario, making it an incorrect choice.

B) return on investment (ROI).

Return on investment (ROI) measures the profitability of an investment relative to its cost, typically factoring in expenses and net income. As the question focuses solely on gross income from a fully rented property without expenses, ROI is not the appropriate metric to use here.

C) gross rent multiplier (GRM).

Gross rent multiplier (GRM) is the correct choice as it evaluates the property based on its gross rental income. This metric is particularly useful in this scenario since the property is 100% rented and expenses are not factored into the calculation, allowing for a clear assessment of value.

D) gross income multiplier (GIM).

The gross income multiplier (GIM) is similar to GRM but typically includes all sources of income and not just rental income. Since the question specifies a focus on rent without expenses, GIM is not the most suitable option for assessing the value of the property in this context.

Conclusion

The gross rent multiplier (GRM) is the most appropriate metric for evaluating a fully rented 6-plex without expenses, as it solely relies on gross rental income to determine property value. Other options, such as NRM, ROI, and GIM, either incorporate expenses or broader income considerations, making them unsuitable for this specific scenario. Thus, GRM clearly stands out as the definitive choice.