What type of properties typically use the Gross Income Multiplier (GIM)?

The Gross Income Multiplier (GIM) is primarily used in the valuation of commercial and industrial properties because it provides a straightforward and effective way to estimate the value of income-producing real estate. The GIM is calculated by dividing the property's sale price by its gross income, highlighting the relationship between income and value.

Commercial and industrial properties often generate substantial and stable income streams, making them suitable for GIM analysis. This method is particularly useful because it allows investors to quickly assess the potential return on investment based on current income levels. The use of GIM in this context efficiently reflects how income generation impacts property valuation, which is crucial for investors making purchasing decisions in these markets.

In contrast, residential properties may rely more on comparable sales or rental income methods rather than GIM, as residential income can vary widely based on numerous factors. Agricultural properties and vacant land are typically valued through different methodologies, such as analyzing land use or specifying future potential rather than focusing on gross income.