Real Estate Appraisal Practice Exam

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Study for the Real Estate Appraisal Exam. Prepare with flashcards and multiple choice questions, each question offering hints and explanations. Get ready for your exam!

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If a duplex has a monthly gross rental income of $1,800 and a GRM of 125x, what is its estimated property value?

$225,000
$250,000
$275,000
$300,000

The correct answer is: $225,000

To determine the estimated property value using the Gross Rent Multiplier (GRM), you multiply the monthly gross rental income by the GRM. In this case, the duplex has a monthly gross rental income of $1,800 and a GRM of 125x. The calculation is as follows: Estimated Property Value = Monthly Gross Rental Income × GRM Plugging in the values: Estimated Property Value = $1,800 × 125 This results in: Estimated Property Value = $225,000 This calculation correctly demonstrates how the GRM method functions for estimating property values based on rental income. The GRM provides a simple way to estimate value, indicating investor perception of how much they value income-producing properties based on their rental income.