Gross Income Multiplier
Categories: Accounting, Econ, Tax
If you’ve ever thought about buying and renting out a place (hi, AirBnB), look no further than the gross income multiplier. The GIM is a great guesstimation (a rough estimate) of the value of an investment property.
GIM means dividing the sale price of the piece of real estate by how much you’d make in a year by renting the place. The gross income multiplier is a good ballpark estimate, which is why it’s used even in large-scale commercial real estate projects.
Still, if you’re serious about a rental property, it’s good to sit down and crunch the numbers more, since GIM doesn’t take into account all the little things like property taxes, utilities, maintenance, and vacancy. For instance, the discounted cash flow method would be a next-stage calculation to see just how much an investment property could yield you.