Which formula is suggested for a house renting for $900 a month to estimate its selling price?

The Gross Rent Multiplier (GRM) is often used to estimate the selling price of an investment property based on its rental income. This method is particularly useful for rental properties because it provides a straightforward way to determine property value by relating the price of the property to the income it generates from rent.

To calculate the estimated selling price, the monthly rental income is multiplied by the GRM, which is a factor derived from comparable properties in the area. The GRM reflects what investors are willing to pay for properties that generate a similar rental income, making it a quick and practical tool for assessing the value of rental properties.

In the case of a house renting for $900 a month, applying the GRM helps you arrive at a rough estimate of its market value based on that income stream. This makes it a pertinent choice for evaluating residential rental properties, as it considers the potential return on investment through monthly rent.

Other methods mentioned, such as the capitalization rate and net present value, focus more on analyzing cash flows or future income over time, which may not provide the quick estimation necessary for selling price assessment based solely on current rental income. The cost approach, which estimates property value based on the cost to construct or replace it, does not directly consider income