PASS GEORGIA
REAL ESTATE EXAM PREPGEORGIA REAL ESTATE EXAM GLOSSARY
Gross rent multiplier
Gross rent multiplier, or GRM, is the relationship between a property's sale price or value and its gross periodic rent.
Valuation and Market Analysis
Income valuation
Define, distinguish, apply, retrieve
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PASS GEORGIA
REAL ESTATE EXAM PREPGEORGIA REAL ESTATE EXAM
GLOSSARY TERM GUIDEBuild the complete exam definition
Learn the rule, separate it from the nearest distractor, then apply it to a Georgia fact pattern.
What does Gross rent multiplier mean?
Gross rent multiplier, or GRM, is the relationship between a property's sale price or value and its gross periodic rent. Value equals gross rent multiplied by the market-derived GRM.
How do you separate the nearest exam answer?
GRM uses gross rent and no operating expenses. Capitalization uses net operating income and a cap rate.
What changes or stays the same in Georgia?
The exam must keep the periods consistent. A monthly GRM pairs with monthly rent, while an annual multiplier pairs with annual rent.
Comparable sales support a monthly GRM of 120, and the subject rents for $2,500 per month. Indicated value is $300,000.
Mixing annual rent with a monthly multiplier produces an answer twelve times too large.
Memory cue: Mixing annual rent with a monthly multiplier produces an answer twelve times too large.PASS GEORGIA
REAL ESTATE EXAM PREPGEORGIA REAL ESTATE EXAM
GLOSSARY TERM GUIDERetrieve the rule under exam conditions
Answer before reading the explanation. Then explain why every distractor belongs to a different term.
Which statement correctly explains Gross rent multiplier?
- A
Gross rent multiplier, or GRM, is the relationship between a property's sale price or value and its gross periodic rent.
- B
Capitalization rate, or cap rate, is the annual net operating income divided by the property's value or price.
- C
Net operating income, or NOI, is annual effective gross income minus operating expenses, before debt service, income taxes, depreciation expense, and owner-specific financing costs.
- D
Effective gross income, or EGI, is potential gross income minus vacancy and collection loss, plus other property income.
Gross rent multiplier is correct. Gross rent multiplier, or GRM, is the relationship between a property's sale price or value and its gross periodic rent. Value equals gross rent multiplied by the market-derived GRM. GRM uses gross rent and no operating expenses. Capitalization uses net operating income and a cap rate. The exam must keep the periods consistent. A monthly GRM pairs with monthly rent, while an annual multiplier pairs with annual rent.
Mark each box only when you can perform the skill without looking.
I can define the term in one precise sentence.
I can separate it from the closest look-alike.
I can explain the Georgia rule or confirm that the national rule applies.
I can answer the practice check and explain every option.
PASS GEORGIA
REAL ESTATE EXAM PREPGEORGIA REAL ESTATE EXAM
GLOSSARY TERM GUIDEConnect the term to the wider exam
Use these relationships to move from isolated recall to a connected exam model.
Valuation and Market Analysis complete lesson
https://www.passgeorgiarealestate.com/math/gross-rent-multiplier
Official exam administration and content-outline source.
https://test-takers.psiexams.com/api/content/bulletin/4672Congressionally authorized source for USPAP and appraisal standards.
https://appraisalfoundation.org/imis/TAF/Standards/Appraisal_Standards/TAF/Standards/Appraisal_Standards.aspx