How is the gross income multiplier (GIM) calculated?

The gross income multiplier (GIM) is calculated by dividing the property's value by its gross annual income. This method provides a straightforward assessment of how many years' worth of income would be needed to equal the property's market value. Essentially, the GIM reflects the relationship between the property's income-generating potential and its value, allowing investors and assessors to evaluate whether a property is fairly priced compared to others in the market.

In real estate investment analysis, knowing the GIM helps determine the investment's viability. A lower GIM signifies a better potential return on investment, suggesting the property is underpriced relative to its income, while a higher GIM might indicate overpricing.

This method contrasts with other options that do not directly relate to the income potential of the property, such as combining land and depreciated costs or assessing comparisons with other properties. Additionally, focusing on monthly changes does not reflect the direct ratio of income to property value needed to calculate GIM. Thus, dividing property value by gross annual income is the correct and most relevant approach for GIM computation.