Gross Income Multiplier: Unit 2 Flashcards
6 Questions
100 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is a Gross Income Multiplier (GIM)?

  • A method to evaluate market trends
  • A calculation used only for residential properties
  • A measure of property price to annual rental income (correct)
  • A formula to calculate utilities and maintenance costs
  • What is the formula for calculating GIM?

    Sales Price / Annual Income

    How do you calculate the Sales Price using GIM?

    Annual Income x GIM

    How do you calculate the Annual Income using GIM?

    <p>Sales Price / GIM</p> Signup and view all the answers

    What is the value of a commercial property with an annual income of $33,600 and a GIM of 9.3?

    <p>$312,480</p> Signup and view all the answers

    What is the GIM of a commercial property with an annual income of $33,600 and a value of $312,480?

    <p>9.3</p> Signup and view all the answers

    Study Notes

    Gross Income Multiplier (GIM) Overview

    • GIM is a method to estimate the value of investment properties by dividing sale price by gross annual rental income.
    • Commonly used for commercial real estate, including shopping centers and apartment complexes.
    • Does not account for expenses like utilities, taxes, maintenance, or vacancies.

    GIM Calculation

    • Formula: GIM = Sales Price / Annual Income
    • This simplifies comparing property values and understanding investment potential.
    • Sales Price can be determined by multiplying Annual Income by GIM.
    • Annual Income is calculated as Sales Price divided by GIM.

    Example Calculations

    • For a commercial property with an annual income of $33,600 and a GIM of 9.3:
      • Sales Price = $33,600 x 9.3 = $312,480
    • To find GIM from given values:
      • GIM = $312,480 (price) ÷ $33,600 (annual income) = 9.3

    Limitations

    • GIM is a simplified metric; more detailed valuation methods include capitalization rate (cap rate) and discounted cash flow.

    Studying That Suits You

    Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

    Quiz Team

    Description

    Explore the key concepts of the Gross Income Multiplier (GIM) through these Unit 2 flashcards. Understand its definition and application in valuing commercial real estate properties, including its limitations. Perfect for students and professionals looking to deepen their knowledge of real estate valuation.

    More Like This

    Gross Income and Overtime Concepts
    25 questions
    Gross Income Concepts and Elements
    9 questions
    Use Quizgecko on...
    Browser
    Browser