Using a gross rent multiplier, if an income property has a monthly rent of $1,450, what would be its estimated value based on comparables?

To understand why an estimated value of $145,000 is the correct choice based on a gross rent multiplier, it’s important to know how gross rent multipliers work. The gross rent multiplier (GRM) is a number used to estimate the value of an income property based on the rental income it generates. This value is calculated by multiplying the monthly rent by the GRM, which is derived from comparable properties in the area.

In this scenario, if the property has a monthly rent of $1,450, and we assume a reasonable GRM from comparables is approximately 100 (this number can vary widely depending on the market conditions and location), the calculation for the estimated value would be:

Monthly Rent ($1,450) multiplied by the GRM (100) equals an estimated value of $145,000.

This straightforward method shows that analyzing a property's potential income through the GRM provides a reliable indicator of its market value, helping to ensure that the estimate is grounded in real income potential rather than arbitrary figures. Therefore, when considering the question, an estimated value of $145,000 is a logical conclusion, aligning with the calculation of multiplying rent by the GRM.