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If the monthly rent on a particular duplex is $1,200 per month for each unit and the gross rent multiplier (GRM) is 12.5, what is its value?

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Question:

A
$360,000.

explanation

The multiplier method for calculating a property’s value under the income approach has two steps when the multiplier is known, as is the case in this question.

Start by determining the total annual rents generated by an income-producing property.

$1,200 (rent per unit) x 2 (units) x 12 (months) = $28,800

Next, multiply the gross rents ($28,800) by the GRM given in the question

$28,800 (total rent) x 12.5 (GRM) = $360,000

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