What is the greatest weakness in using GIM as a unit of comparison?

• A. It is highly precise
• B. It ignores vacancy
• C. It overvalues depreciation
• D. It is simplistic, and may not fully address vacancy or expenses

Answer: (D)

Gross Income Multiplier uses the property's gross income to estimate value, but it leaves out the costs that actually eat into income. The key weakness is its simplicity and failure to account for vacancy and operating expenses. Because it ignores how much is lost to vacancies and ongoing expenses, two properties with the same gross income can have very different net incomes and thus values. For instance, a property with high vacancy or high operating costs will generate less NOI even if its gross income matches another property, leading GIM-based estimates to misstate value. This method also omits depreciation, financing terms, and other factors that influence true value, making it less precise in many situations.