A Gross Multiplier under 20 is typically used with what type of rent?

A Gross Multiplier under 20 is typically applied to properties where the income is assessed on an annual basis. The reason this relationship exists is that the Gross Rent Multiplier (GRM) is calculated by dividing the property's purchase price by its gross rental income. When dealing with annual rent, utilizing a Gross Multiplier under 20 reflects a valuation method that aligns with the income expectations of residential properties that generate rental income on a year-to-year basis.

Using a Gross Multiplier under 20 for monthly or weekly rent would not provide an accurate reflection of the property’s value because these types of rent have shorter lease terms and different market dynamics, which can skew the multiplier. In commercial real estate, while gross multipliers can be used, the values often differ significantly based on longer leases and potentially higher returns, making a multiplier of 20 or above more common in that sector. Therefore, annual rent is the most appropriate context for a Gross Multiplier under 20, making it the correct choice.