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An office building rents for $600,000, has expenses of $400,000, and a cash flow of $100,000. The prevailing gross rent multiplier is 8. Using the GRM, what is the value of the building?

a. $800,000
b. $1,600,000
c. $3,200,000
d. $4,800,000

Answer :

hyderali230

Answer:

d. $4,800,000

Explanation:

Gross Rent Multiplier (GRM) = Property Value /  Annual Gross Rents

Annual Gross Rents X Gross Rent Multiplier (GRM) = Property Value

So, According to given formula

Gross Rent = $600,000

Gross Rent Multiplier (GRM) = 8

Building Value = Gross Rents X Gross Rent Multiplier (GRM)

Building Value = $600,000 X 8

Building Value = $4,800,000

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