The capitalization rate (or "cap rate") is found by dividing the "net operating income" (NOI) by the sales price. The "gross rent multiplier" (GRM) uses the gross rent in its calculation.
These are questions that the above text answers:
1. What is the formula for calculating the capitalization rate?
2. How is the net operating income (NOI) used in the calculation of the capitalization rate?
3. What is the formula for calculating the gross rent multiplier (GRM)?
4. What type of rent is used in the calculation of the gross rent multiplier?
5. How does the capitalization rate differ from the gross rent multiplier?
6. What is the purpose of the capitalization rate in real estate investment analysis?
7. How is the sales price used in the calculation of the capitalization rate?
8. What is the purpose of the gross rent multiplier in real estate investment analysis?
9. What is the relationship between the gross rent multiplier and the sales price?
10. How does the gross rent multiplier differ from the capitalization rate in terms of the income used in their calculations?