What is the loss in value to a residence with a gross rent multiplier of 115 due to a nearby commercial property reducing its rent by $47 per month?

To find the loss in value to the residence due to the decrease in rent caused by a nearby commercial property, one can use the concept of the Gross Rent Multiplier (GRM). The GRM is a valuation tool used to estimate the value of income-producing properties based on their rental income.

The formula to estimate the loss in value is:

Loss in value = Decrease in monthly rent × GRM × 12 months

In this scenario, the decrease in rent is $47 per month. Given the GRM of 115, you would perform the calculation as follows:

1. Multiply the monthly decrease in rent by the GRM:

$47 (monthly loss) × 115 (GRM) = $5,405.

2. Since the loss needs to be evaluated over a year’s worth of rent (12 months), you would also multiply the result by 12. However, in this context, since we are only considering the immediate loss derived from the GRM, the direct calculation yields the immediate effect on value rather than annualizing it.

Therefore, the calculated loss in value of $5,405 corresponds to the immediate impact of the reduction in rent.

The answer provided in the original context as B ($