How is the Gross Income Multiplier (GIM) calculated?

The Gross Income Multiplier (GIM) is calculated by dividing the sales price of a property by its annual income. This ratio allows investors to evaluate the value of rental properties and understand how much they are paying for each dollar of income generated.

Using the sales price and the annual income provides a standardized measure that reflects the expected operational efficiency of the property, facilitating comparisons across different investment opportunities. The GIM can also help in estimating the potential value of properties by analyzing their income-generating capacity relative to their market prices.

Other options do not correctly represent how GIM is calculated. For instance, monthly income divided by sales price focuses on a shorter time frame, thus it wouldn't yield the multiplier used for annual income assessments. Similarly, calculations involving annual income divided by monthly rent or sales price divided by gross rent are unrelated to the GIM concept, as they do not provide the relevant comparison for the purpose of investment analysis.