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. Home & Auto

    How To Analyze Real Estate Investment Trusts

    REITs are much like dividend-paying companies, but analyzing them requires consideration of the accounting treatment of property.
  2. Home & Auto

    Will Your Home Remodel Pay Off?

    Some renovations will mean a bigger sale price on your home, while others will just cost you.
  3. Home & Auto

    Simple Ways To Invest In Real Estate

    Owning property isn't always easy, but there are plenty of perks. Find out how to buy in.
  4. Fundamental Analysis

    How do you use the price-to-book ratio to evaluate a company's value?

    Understand how investors and market analysts use the price-to-book ratio to evaluate the worth of a company and why this evaluation tool is useful.
  5. Mutual Funds & ETFs

    Is a REIT a type of ETF?

    Learn the differences between real estate investment trusts, or REITs, and exchange-traded funds, or ETFs, to see how the two combine to make a unique investment.
  6. Personal Finance

    If a telecommunication company wants to build a tower on my land how much should I charge?

    Get help in understanding how much income it is possible to receive for leasing land to a telecommunications company for building a cell tower.
  7. Fundamental Analysis

    What role does discounted cash flow (DCF) play in stock valuation?

    Understand the meaning and significance of discounted cash flow, and learn how market analysts commonly use this stock evaluation tool.
  8. Investing Basics

    What are essential steps to financial due diligence?

    Explore different areas of financial due diligence. Learn the steps of due diligence that may help ensure selected investments are profitable.
  9. Escrow is a financial agreement involving two parties, usually a buyer and a seller.
    Home & Auto

    What does "In Escrow" Mean?

    Escrow is a financial agreement involving two parties, usually a buyer and a seller. The buyer deposits money, securities or other funds into the escrow account, where they are held until both ...
  10. Home & Auto

    Where are home values falling the fastest in the US, and why?

    Learn about the metropolitan areas in the United States experiencing the largest drops in median single family homes values in 2014 and the reasons behind it.

You May Also Like

Hot Definitions
  1. Christmas Tree

    An options trading strategy that is generally achieved by purchasing one call option and selling two other call options at ...
  2. Christmas Club

    A short-term savings account that usually pays out the full account balance to its account holders once each year, right ...
  3. Boston Snow Indicator

    A market theory that states that a white Christmas in Boston will result in rising stock prices for the following year. For ...
  4. Christmas Island Dollar

    The former currency of Christmas Island, an Australian island in the Indian Ocean that was discovered on December 25, 1643. ...
  5. Santa Claus Rally

    A surge in the price of stocks that often occurs in the week between Christmas and New Year's Day. There are numerous explanations ...
  6. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
Trading Center