California Real Estate Practice Exam

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Study for the California Real Estate Exam with confidence. Engage with interactive questions designed to enhance your understanding of real estate principles, laws, and practices. Prepare thoroughly for your licensing test and ensure you have the knowledge to succeed in your real estate career!

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Using the gross rent multiplier method, what is the value of a residential property with a four-unit building, each unit renting for $750 per month, and a multiplier of 157?

$471,000
$491,000
$450,000
$500,000

The correct answer is: $491,000

The gross rent multiplier method is used to estimate the value of a property based on its rental income. The multiplier is a number that is multiplied by the annual gross rental income to determine the property's value. In this case, the gross rental income for the property is $36,000 ($750 x 4 units x 12 months). To find the value of the property, we multiply the gross rental income by the multiplier. $36,000 x 157 = $5,652,000. Then, we divide the result by 1000 to get the final value of the property, which is $491,000. Option A is incorrect because it does not take into account the month-to-month variability of the rental income and assumes a constant annual gross rental income. Option C is incorrect because it does not include the number of units, which greatly affects the value of