What type of properties utilize the Gross Rent Multiplier (GRM)?

The Gross Rent Multiplier (GRM) is primarily used for evaluating residential investment properties. It provides a quick and straightforward method for investors to estimate the value of a property based on its rental income. The formula for GRM involves taking the property's sale price and dividing it by its annual gross rental income.

This method is particularly beneficial in the residential sector because it accounts for income generated through rent, making it easier for investors to analyze potential investments and compare similar properties. GRM is simpler to apply in residential contexts due to the more standardized rental markets and property types.

Utilizing GRM in commercial, agricultural, or industrial properties is less common, as these sectors often require more complex valuation methods that consider additional factors such as operating expenses, tenant stability, and lease agreements. Thus, GRM is best suited for residential properties, which is why the correct choice in this context is residential.