Effective Gross Income Multiplier (EGIM)
The ratio of a property's sale price to its effective gross income. Similar to GRM but uses income after vacancy and collection losses, providing a more refined income multiplier.
EGIM = Sale Price / Effective Gross Income. It is a refinement of the GRM technique because it accounts for vacancy differences between properties. Two properties with the same gross rent but different vacancy rates would have different EGIMs, reflecting their different income quality. Like GRM, EGIM is extracted from comparable sales and applied to the subject's effective gross income to produce a value indication. EGIM is less commonly used than GRM for small residential properties but provides a more accurate comparison when vacancy rates vary significantly between comparables.
Related Terms
Gross Rent Multiplier (GRM)
GRMThe ratio of a property's sale price to its gross monthly (or annual) rental income.
Effective Gross Income (EGI)
EGIPotential gross income minus vacancy and collection losses, plus other income (laundry, parking, late fees).
Income Approach
A valuation method that estimates a property's value based on the income it generates or is expected to generate.
Vacancy Rate
The percentage of available rental units or space that is unoccupied at a given time.
More in Income Approach
View allCapitalization Rate (Cap Rate)
Cap RateThe ratio of a property's net operating income to its market value or sale price, expressed as a percentage.
Net Operating Income (NOI)
NOIThe annual income remaining after deducting all operating expenses from effective gross income, but before deducting debt service (mortgage payments) and income taxes.
Discounted Cash Flow Analysis (DCF)
DCFA yield capitalization technique that estimates property value by projecting future cash flows (income minus expenses) over a holding period and discounting them to present value using a market-derived discount rate..
Market Rent
The rental income a property would most likely command on the open market, based on analysis of comparable rental properties in the area.