Complete/Correct Question:
An investor is analyzing a three-unit property by looking at its ability to produce future income. Which of the following would most likely be used to determine this value?
a. Effective gross income
b. Gross income multiplier
c. Gross rent multiplier
d. Potential gross income
Answer:
c, gross rent multiplier
Explanation:
Gross rent multiplier can be defined as the ratio of the price of a real estate investment to the annual income before the calculation of expenses.
It can simply be said to be the number of years it would take a property for pay for itself through rent collection.
Gross rent multiplier is very useful when deciding or trying to select properties to invest in to ensure that factors such as depreciation, periodical cost, etc affects the property/investment drastically.
in the case of the investor in the question above, gross rent multiplier will be used to determine what the future holds for the property.
Cheers
There are different aspects to income. A gross income multiplier would be the most likely be used to determine this value.
A gross income multiplier (GIM) is simply known to be a rough estimate of the value of a specific investment property.
It is often calculated by dividing the property's sale price using its gross annual rental income. GRM is known to be very important in real estate due to the fact that has its usability and speed.
An investor analyzing a three-unit property by looking at its ability to produce future income can therefore use gross income multiplier.
Learn more about gross income multiplier from
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