What is the formula for determining the Gross Rent Multiplier?

The Gross Rent Multiplier (GRM) is a metric used in real estate to evaluate the relationship between a property's price and its rental income. The correct formula for determining the Gross Rent Multiplier is the sales price of the property divided by its gross income, which is typically referred to as 'income'. This calculation provides insight into how many years it will take for an investor to pay back the price of the property based purely on its rental income.

Looking at the other choices, the option that specifies total expenses divided by sales price is not relevant to the GRM calculation, as expenses do not factor into this metric. The selection suggesting sales price divided by net income is more aligned with a capitalization rate calculation, which also evaluates investment properties but focuses on net income after expenses, rather than gross income. Finally, the idea of net income divided by market rate does not convey any meaningful relationship regarding the property's price relative to its rental earnings, which is fundamental in understanding the GRM. Therefore, option C accurately captures the essence of the GRM, emphasizing the essential connection between sales price and income in property valuation.