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

Question

Destiny Crane

Business

26 June, 17:50

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

+1

Answers (1)

Know the Answer?

Blayne · Answer 1

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

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

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