Gross Income Multiplier

AAA

DEFINITION of 'Gross Income Multiplier'

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.







INVESTOPEDIA EXPLAINS '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. Builders Risk Coverage Form

    An insurance policy that covers residential and commercial structures ...
  2. Capitalization Rate

    A rate of return on a real estate investment property based on ...
  3. Cash Flow

    1. A revenue or expense stream that changes a cash account over ...
  4. Property Tax

    A tax assessed on real estate by the local government. The tax ...
  5. Commercial Real Estate

    Property that is used solely for business purposes. Examples ...
  6. Real Estate Operating Company - ...

    A company that invests in real estate and whose shares trade ...
Related Articles
  1. How To Analyze Real Estate Investment ...
    Home & Auto

    How To Analyze Real Estate Investment ...

  2. Will Your Home Remodel Pay Off?
    Home & Auto

    Will Your Home Remodel Pay Off?

  3. Simple Ways To Invest In Real Estate
    Home & Auto

    Simple Ways To Invest In Real Estate

  4. The Irreplaceable Brand Of Donald Trump
    Investing News

    The Irreplaceable Brand Of Donald Trump

comments powered by Disqus
Hot Definitions
  1. Last In, First Out - LIFO

    An asset-management and valuation method that assumes that assets produced or acquired last are the ones that are used, sold ...
  2. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  3. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  4. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  5. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  6. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
Trading Center