Effective Gross Income Multiplier [0565]

An apartment building is estimated to have a market value of $5,000,000.  Potential gross income is $1,000,000, vacancy loss is $50,000 and operating expenses are $350,000.  What is the effective gross income multiplier?

Solution:

The operating expenses are not necessary to this problem.

EGIM = Value ÷ EGI

EGI = $1,000,000 – $50,000 = $950,000

EGIM = $5,000,000 ÷ $950,000 = 5.26