For which of these properties would the gross rent multiplier method be most appropriate?

Study for the Arizona Real Estate Exam. Boost your knowledge with flashcards and multiple choice questions with explanations. Be exam-ready with our comprehensive review!

The gross rent multiplier (GRM) method is commonly used to evaluate income-producing properties by comparing their purchase price to the income they generate from rent. This approach is particularly effective for properties with multiple rental units, where rental income can be analyzed and projected more reliably.

In the context of the properties listed, a duplex is ideal for the GRM method because it consists of two separate rental units, allowing for a straightforward analysis of rental income versus property value. This dual income stream provides a clearer picture of the property's financial viability, making calculations simpler and more relevant for potential investors.

While other options may yield some insight into potential income, single-family homes (whether owner-occupied or not) typically do not operate with the same investment perspective as multi-unit properties, making GRM less suitable. Retail complexes and apartment buildings, while they produce rental income, often involve more complex factors such as commercial leases or varying unit sizes and types, which may complicate the analysis. Therefore, the duplex stands out as the most fitting choice for applying the gross rent multiplier method effectively.

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