What is the formula for the Gross Income Multiplier?

The Gross Income Multiplier (GIM) is a valuation metric used to evaluate the value of income-producing properties. The formula for the Gross Income Multiplier is defined as the property value divided by its annual gross income. Therefore, this formula provides a straightforward approach to assess how many times the gross income can fit into the property value, indicating the relationship between income and value.

Utilizing this multiplier, investors can analyze various income-producing properties by comparing their GIMs; a lower GIM suggests a potentially undervalued property relative to its income stream, while a higher GIM might indicate an overvalued property in comparison to the income it generates. This helps potential buyers by offering an initial benchmark that assists in making investment decisions.