valuation

gross income multiplier

The gross income multiplier (GIM) is a quick valuation tool used for income properties, typically commercial or multi-unit, that relates sale price to annual gross income from all sources. It is calculated as sale price divided by annual gross income, then applied to a subject property's income to estimate value. It does not account for operating expenses, so it is a rough estimate.

Exam tip: GIM uses annual gross income (often for commercial property), while GRM usually uses monthly rent for residential property. Value = income × multiplier.
Example: Comparable buildings sell for about 8 times annual gross income. A subject earning $120,000 per year has an estimated value of $960,000.

1. A commercial property has potential gross income of $240,000 and an 8% vacancy allowance. Using a gross income multiplier of 6, what is the estimated value?

Answer & explanation

Answer: D. EGI = $240,000 - 8% = $220,800; value = $220,800 x 6 = $1,324,800.

Related terms & state variants

effective gross income gross rent multiplier income approach potential gross income

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Last verified: 2026-10-23