What is the gross income multiplier (GIM) for a commercial building that produces an annual gross income of $136,000 and is sold for $888,000?

To find the gross income multiplier (GIM), you divide the sale price of the property by its annual gross income. In this scenario, the commercial building's sale price is $888,000, and its annual gross income is $136,000.

The calculation is as follows:

GIM = Sale Price / Annual Gross Income

GIM = $888,000 / $136,000

When you perform the division, you get a GIM of approximately 6.53. This means that for every dollar of income generated by the property, the market is willing to pay about $6.53 in purchase price.

Understanding GIM is essential in real estate as it helps investors evaluate the relationship between income generation and property valuation. It’s a quick way to assess whether a property is priced appropriately relative to its income potential.