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gross income multiplier

   Also found in: Acronyms 0.02 sec.
gross income multiplier

A rule of thumb for evaluating the reasonableness of an asking price. One compares the monthly or annual gross income to the asking price and evaluates how that compares to typical ratios for similar properties. For example, some investors will not pay more than 100 times the monthly gross income for a property. If a house rents for $900 per month, the investor will pay $90,000 but no more.The method is not a good indication of value and would never be employed by an appraiser, but it has its uses as a preliminary qualifier or disqualifier of properties.



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The gross income multiplier is the number used to multiply with annual gross receipts to arrive at the amount a buyer is willing to fork over for an apartment building.
In general, capitalization rates declined, gross income multipliers (GIMs) increased and the price per square foot increased across property types and in all markets.
The city is taking the income and applying their capitalization rate or a gross income multiplier in some neighborhoods and then taking 45 percent of that value, added Margulies.
 
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