What is a 'Gross Income Multiplier'

A gross income multiplier is a rough measure of the value of an investment property that is obtained by dividing the property's sale price by its gross annual rental income. GIM is used in valuing commercial real estate, such as shopping centers and apartment complexes, but is limited in that it does not consider the cost of factors such as utilities, taxes, maintenance and vacancies. Other, more detailed methods commonly used to value commercial properties include capitalization rate (cap rate) and the discounted cash flow method.







BREAKING DOWN 'Gross Income Multiplier'

The gross income multiplier can be used to roughly determine whether the asking price of a property is a good deal. Multiplying the GIM by the property's gross annual income yields the property's value, or what it should be selling for.

RELATED TERMS
  1. Commercial Property

    Real estate property that is used for business activities. Commercial ...
  2. Income Approach

    A real estate appraisal method that allows investors to estimate ...
  3. Property Management

    The administration of residential, commercial and/or industrial ...
  4. Income Property Mortgage

    A loan given to an investor to purchase a residential or commercial ...
  5. Effective Gross Income - EGI

    The amount of income produced by a piece of property, plus miscellaneous ...
  6. Form 4797

    A tax form distributed by the Internal Revenue Service (IRS) ...
Related Articles
  1. Investing

    How To Value A Real Estate Investment Property

    Two common methods for real estate valuation are the discounted net operating income and gross income multiplier approaches.
  2. Investing

    What You Should Know About Real Estate Valuation

    Anyone involved in a real transaction can benefit from gaining a basic understanding of the different methods of real estate valuation.
  3. Investing

    How To Value A Real Estate Investment Property

    Make sure you know what your real estate investment is worth before you sign the ownership papers.
  4. Investing

    Your Property Tax Assessment: What Does It Mean?

    The amount of a property tax bill is based on the property’s value, the exemptions it qualifies for, its use and the local property tax rate.
  5. Investing

    Explaining the Income Approach

    The income approach is one of the three main methods that appraisers use to value property.
  6. Investing

    4 Ways To Value A Real Estate Rental Property

    Learn to evaluate real estate and get into the investment game.
  7. Investing

    8 Must-Have Numbers For Evaluating A Real Estate Investment

    These calculations can help you figure out if a particular property will be a valuable investment.
  8. Investing

    7 Steps To A Hot Commercial Real Estate Deal

    For savvy real estate investors, times of lower prices reveal investment opportunity.
  9. Small Business

    Capitalization Rate

    Capitalization Rate is a financial term most commonly used in the real estate investment industry. It is often simply called the Cap Rate.
  10. Taxes

    Sell Your Rental Property For A Profit

    Being a landlord can be taxing, especially when you want to sell. Find out how to reduce your burden.
RELATED FAQS
  1. An appraiser forms the following estimates for a rental property ...

    Free info on financial certification exams including study guides, exam questions, and much more! Read Answer >>
  2. How is Net Operating Income (NOI) used in real estate?

    Find out more about net operating income, what it measures and how it is used to analyze a real estate property's return. Read Answer >>
  3. What is the importance of the capitalization rate in real estate investing?

    Find out why an investment property's capitalization rate is important to real estate investors and how it can be used to ... Read Answer >>
  4. What criteria does a property need to meet to be considered an 'investment grade' ...

    Learn what it takes for institutional investors to consider a property "investment grade," such as real estate investment ... Read Answer >>
  5. What are the differences between gross profit and net income?

    Find out how companies determine gross profits and net income, and how these figures provide quick snapshots of their financial ... Read Answer >>
Hot Definitions
  1. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  2. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  3. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  4. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
  5. Job Market

    A market in which employers search for employees and employees search for jobs. The job market is not a physical place as ...
  6. Yuppie

    Yuppie is a slang term denoting the market segment of young urban professionals. A yuppie is often characterized by youth, ...
Trading Center