Which two elements are necessary when using the Gross Income Multiplier to estimate value?

Which two elements are necessary when using the Gross Income Multiplier to estimate value?

• A. Income and sale price
• B. Income and expenses
• C. Rent and price
• D. Operating expenses and sale price

Answer: (A)

Gross Income Multiplier uses how much income a property generates in relation to its price. To apply it, you need two pieces: the property's gross income (the income figure you’ll use) and a price-based multiplier derived from comparable sales (the multiplier equals sale price divided by gross income). Once you have the subject’s gross income and that multiplier, you estimate value by multiplying the gross income by the multiplier. Expenses are not part of this method, so the necessary elements are income and sale price.

Gross Income Multiplier uses how much income a property generates in relation to its price. To apply it, you need two pieces: the property's gross income (the income figure you’ll use) and a price-based multiplier derived from comparable sales (the multiplier equals sale price divided by gross income). Once you have the subject’s gross income and that multiplier, you estimate value by multiplying the gross income by the multiplier. Expenses are not part of this method, so the necessary elements are income and sale price.