What is the Gross Income Multiplier (GIM) used for?

The Gross Income Multiplier (GIM) is a valuation tool used in real estate to estimate the value of an income-producing property. The GIM is derived by taking the property's sale price and dividing it by its gross annual income. This ratio provides investors and appraisers with a quick method to assess the value of a property based on its income generation capabilities.

When using the GIM, investors can compare similar properties within the same market to determine if a property is priced appropriately relative to its income. This method emphasizes the relationship between the price of the property and its income stream, which is fundamental for investment analysis.

The other options do not accurately represent the function of the GIM. For instance, while it provides insight into market demand, it is not specifically designed as a measure of demand. Similarly, it does not calculate property taxes, nor does it directly determine monthly rental income; rather, it focuses on the annual gross income generated by a property. Therefore, the primary utility of the GIM is as a method for estimating the value of an income property based on its revenue potential.