The Gross Income Multiplier does NOT account for which of the following?

The Gross Income Multiplier (GIM) is a valuation method that focuses on the relationship between the purchase price of a property and its annual gross income. It is calculated by dividing the sale price of a property by its annual gross income. The primary purpose of using the GIM is to provide a quick estimate of the value of an income-producing property based on its income-generating potential.

The GIM does not take into account utility and maintenance costs, which are ongoing expenses associated with the property. These costs can significantly impact the net income that a property generates but are not considered in the GIM calculation, as this metric purely looks at gross income and the purchase price.

When valuing a property using the GIM, factors like annual gross income, property age, and purchase price are relevant as they directly affect the multiplier calculation. However, the operational expenses such as utilities and maintenance fall outside the scope of this method, emphasizing its focus on gross income without adjusting for expenses. This limitation makes GIM useful for quick assessments, but investors should consider a more comprehensive analysis for informed decision-making regarding potential expenses.