What is the formula for the Gross Income Multiplier?

The Gross Income Multiplier (GIM) is a valuation metric used primarily in real estate to assess the value of an income-producing property based on its income-generating potential. The GIM is calculated by dividing the property's value by its gross rental income. This formula allows investors and assessors to estimate the value of a property based on how much income it can generate.

When using the formula "Value / Income = GIM," if you know the sale price (value) of the property and the annual gross income it produces, you can determine the GIM, which serves as a quick indicator of the potential return on investment compared to other properties. A higher GIM might suggest that the property is more expensive relative to its income, while a lower GIM might indicate a better income-producing value relative to the purchase price.

Understanding this formula is essential for professionals assessing real estate, as it provides insights into how much investors might be willing to pay for a property based on expected income.