What is the formula to calculate Gross Income Multiplier (GIM)?

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Multiple Choice

What is the formula to calculate Gross Income Multiplier (GIM)?

Explanation:
Gross Income Multiplier is a quick way to relate how much a property sells for to the income it can generate before expenses. The idea is to see how many dollars of sale price you pay for each dollar of gross income, so the multiplier is always calculated as sale price divided by gross annual income. This uses gross income (potential or actual gross income before operating expenses) rather than net income. Choosing the alternate formulas would either invert the relationship (gross income divided by sale price) or substitute net operating income in place of gross income, which describes different metrics (like price-to-NOI or capitalization-related measures) rather than the GIM.

Gross Income Multiplier is a quick way to relate how much a property sells for to the income it can generate before expenses. The idea is to see how many dollars of sale price you pay for each dollar of gross income, so the multiplier is always calculated as sale price divided by gross annual income. This uses gross income (potential or actual gross income before operating expenses) rather than net income.

Choosing the alternate formulas would either invert the relationship (gross income divided by sale price) or substitute net operating income in place of gross income, which describes different metrics (like price-to-NOI or capitalization-related measures) rather than the GIM.

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