Arizona Appraiser Licensing Practice Exam Prep — Practice Test & Study Guide

The scenario involving high demand for rental properties would likely lead to a higher gross rent multiplier (GRM) because it indicates that property investors are willing to pay more for rental units due to the strong desirability of the property and rental market. When demand is high, tenants are often competing for available rentals, which can drive up rental prices. This increase in rental income, relative to the purchase price of the property, results in a higher GRM, reflecting a more favorable investment scenario for property owners.

In contrast, low rental demand, significant property repairs needed, and low occupancy rates all suggest less favorable conditions for generating rental income. Low demand usually leads to lower rent prices, significant repairs can deter investment and reduce perceived rental value, and low occupancy rates indicate that properties are not being rented out enough to generate substantial income. All these factors would typically result in a lower gross rent multiplier, indicating a less favorable investment opportunity.