Final answer:
The gross rent multiplier is determined by dividing the property value by the annual gross income.
Step-by-step explanation:
The gross rent multiplier can be determined by dividing the property value by the annual gross income. This calculation helps to evaluate the potential income generated by a property relative to its value. The formula is:
Gross Rent Multiplier = Property Value / Annual Gross Income
For example, let's say a property is valued at $500,000 and has an annual gross income of $50,000. Using the formula above, the gross rent multiplier would be:
Gross Rent Multiplier = $500,000 / $50,000 = 10
So, the gross rent multiplier for this property would be 10.
The Gross Rent Multiplier (GRM) is determined by dividing the property value by the annual gross income from the property. To get the annual gross income, you would typically multiply the monthly rent by 12 months. GRM is a useful tool in real estate investment to quickly assess a property's value compared to its income potential without accounting for operating expenses.
Therefore the correct answer is B) Property value divided by the annual gross income.