Why might an appraiser choose to utilize gross income multiplier instead of gross rent multiplier for valuing an income property?

Choosing to utilize a gross income multiplier (GIM) instead of a gross rent multiplier (GRM) is particularly advantageous when valuing an income property that has multiple income sources. The GIM takes into account the total income generated from all potential sources, not just rental income. This is important for properties such as mixed-use developments or commercial properties where income might come from various streams, such as leasing out retail spaces, parking, or other services.

By applying the GIM in these contexts, an appraiser gains a more holistic view of the property’s overall income potential, which provides a more accurate valuation than relying solely on rental income, as would be the case with the GRM. This approach allows the appraiser to factor in expenses and operational costs more effectively, leading to a potentially more equitable assessment of the property’s value in the market.