Which two variables combine to make the Gross Rent Multiplier?

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Multiple Choice

Which two variables combine to make the Gross Rent Multiplier?

Explanation:
Gross Rent Multiplier shows how many months (or years, if you use annual rent) of gross rent the property’s value represents. The two variables you combine are the property's value and the gross rent. The GRM is calculated by dividing value by gross rent. If you’re using monthly figures, you divide value by monthly gross income; if you’re using annual figures, you divide value by annual gross income. For example, with a $300,000 property value and $2,500 in monthly gross rent, the GRM is 300,000 / 2,500 = 120, meaning 120 months of rent. Using the rent divided by value would give the reciprocal of the GRM, which isn’t how this metric is applied.

Gross Rent Multiplier shows how many months (or years, if you use annual rent) of gross rent the property’s value represents. The two variables you combine are the property's value and the gross rent. The GRM is calculated by dividing value by gross rent. If you’re using monthly figures, you divide value by monthly gross income; if you’re using annual figures, you divide value by annual gross income. For example, with a $300,000 property value and $2,500 in monthly gross rent, the GRM is 300,000 / 2,500 = 120, meaning 120 months of rent. Using the rent divided by value would give the reciprocal of the GRM, which isn’t how this metric is applied.

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