Given varied rental incomes, how do you calculate the Gross Rent Multiplier (GRM) for a property that rents for $740?

To find the Gross Rent Multiplier (GRM), the formula used is Sales Price divided by Rent. The GRM is a valuation method that helps investors assess the potential profitability of rental properties by comparing the sales price to the rental income generated by the property.

In this scenario, with a property that rents for $740, you would take the Sales Price of the property and divide it by the $740 rental income. This results in a multiplier that indicates how much investors are willing to pay per dollar of rent. A lower GRM might indicate a better investment, as it suggests you are paying less for each dollar of rental income.

The other options do not align with the standard definition and calculation of GRM. The Rent/Sales Price would give you a ratio of income to price, not the multiplier used in GRM calculations. Similarly, Rent/Mean Ratio and Sales Price/Mean Income do not represent the relationship defined by the GRM and would not yield a meaningful valuation metric for rental properties.