The process of estimating the present worth of a property based on its anticipated income
D. capitalization
A number that, when multiplied by the income, gives an indicator of value
A. multiplier
A figure which, when multiplied by the monthly rental income, will equal the property's market value
B. gross rent multiplier (GRM)
Income (calculated annually or monthly) received from rental units before any expenses are deducted
C. gross rent
A figure which, when multiplied by the annual gross income, will equal the property's market value
D. gross income multiplier (GIM)
The ratio between the value or sales price of a property and its potential gross income
C. potential gross income multiplier (PGIM)
The amount of income a property could potentially generate assuming 100% occupancy at market rental rates
A. potential gross income (PGI)
The ratio between the effective gross income and the value of the property
D. effective gross income multiplier (EGIM)
The amount of income remaining after vacancy and credit losses are deducted from gross income
A. effective gross income (EGI)
The process of estimating the present worth of a property based on its anticipated income is called
C. capitalization
Which statement is incorrect regarding GRM and GIM
B. the GRM and the GIM are identical
How is the GRM calculated?
B. divide the value by gross rent
Subject's prop value $400,000
PGI $80,000
Vacancy and collection losses $(5%)?
PGIM (m-multiplier) = Value / PGI
EGIM = Value / EGI
1. From the information above, what is the vacancy and collection loss?
a. $3,000
b. $4,000
c. $4,3000
d. $3,750
2. What is the EGI?
a. $40,000
b. $56,000
c. $76,000
d. $84,000
3. How is the PGIM calculated?
a. divide the PGI by the value
b. divide the PGI by the EGI
c. divide the value by the PEGI
d. add the value to the vacancy factor
4. What ist he PGIM int he previous example?
a. 4.5
b. 5.0
c. 5.3
d. 4.75
5. What ist he EGIM in the previous example?
a. 5.26
b. 5.56
c. 4.76
d. 6.0
1. What is the EGIM for Comp1?
a. 8
b. 9
c. 12
d. 13
2. What is the effective annual income for Comp 2?
a. $57,500
b. $60,000
c. $55,000
d. $47,500
3. What is the sale price for Comp3?
a. $499,000
b. $500,000
c. $600,000
d. $550,000
4. What is the monthly income for Comp 4?
a. $2,000
b. $3,750
c. $4,275
d. $5,250
5. What is the monthly EGIM for comparable 4?
a. .92
b. 120
c. 1.92
d. 132
6. What is the monthly EGIM for comp 5?
a. 9.5
b. 11.25
c. 114
d. 144
7. What is the mean (average) EGIM for all the comps above?
a. 11
b. 12
c. 9.55
d. 10.45
