What are the most common units of comparison used when evaluating income-producing properties?

• A. Cap rate and GRM
• B. NOI and Cap rate
• C. GIM and GRM
• D. GIM and NOI

Answer: (C)

When evaluating income-producing properties, investors often rely on income-based multipliers to quickly compare value across properties. The two most common units are the gross income multiplier (GIM) and the gross rent multiplier (GRM). These multiply a property's gross income or gross rent by a factor to estimate value, which makes them simple and fast for screening and comparison without getting bogged down in expenses or financing details.

GIM uses gross income (often annual) and yields value by applying the multiplier to that income. GRM uses gross rent (usually annual rent) and does the same with a rent-based figure. These are preferred for quick, rough comparisons because they require less data than methods based on net income or expenses.

Cap rate is a percentage used in direct capitalization with net operating income, and NOI is a dollar amount representing income after expenses; both are part of different valuation approaches and don’t function as the quick, income-based multipliers that GIM and GRM do.