Which statement correctly expands the acronym GRM?

Which statement correctly expands the acronym GRM?

• A. Gross Revenue Multiplier
• B. Gross Rate Multiplier
• C. Granular Rent Multiplier
• D. Gross Rent Multiplier

Answer: (D)

Gross Rent Multiplier is the term used. It’s a quick valuation measure in real estate that relates a property's price to the gross income it can generate from rent, without considering operating expenses. The idea is to compare similar rental properties by dividing the sales price by the gross rent, which can be based on monthly rent or annual rent depending on the convention you follow. For example, if a property sells for $350,000 and rents for $2,000 a month, using the monthly basis gives a GRM of 350,000 ÷ 2,000 = 175. If you use annual rent, that same property would have GRM = 350,000 ÷ (2,000 × 12) ≈ 14.6. This ratio helps investors quickly gauge value across properties, though it ignores expenses, vacancies, and financing terms. The other phrases listed aren’t standard terms used in this context, so they don’t represent what GRM stands for.

Gross Rent Multiplier is the term used. It’s a quick valuation measure in real estate that relates a property's price to the gross income it can generate from rent, without considering operating expenses. The idea is to compare similar rental properties by dividing the sales price by the gross rent, which can be based on monthly rent or annual rent depending on the convention you follow. For example, if a property sells for $350,000 and rents for $2,000 a month, using the monthly basis gives a GRM of 350,000 ÷ 2,000 = 175. If you use annual rent, that same property would have GRM = 350,000 ÷ (2,000 × 12) ≈ 14.6. This ratio helps investors quickly gauge value across properties, though it ignores expenses, vacancies, and financing terms. The other phrases listed aren’t standard terms used in this context, so they don’t represent what GRM stands for.