Free Pennsylvania Real Estate Practice Exam Practice Question
The gross income multiplier (GIM) is BEST used to value:
Correct Answer: C
Rationale: The gross income multiplier (GIM) is most effective for valuing investment properties because it directly relates property value to income generation, which is crucial for investors assessing potential returns.
Option A, foreclosed residential real estate, may not provide consistent income data, making GIM less reliable. Option B, real estate owned (REO) sites, typically involve distressed properties with uncertain income potential, further diminishing GIM's applicability. Option D, federally-owned properties, often do not operate on traditional income models, rendering GIM ineffective for their valuation.
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