Property Valuation
In New York, the 'income multiplier' approach to commercial valuation differs from the direct capitalization approach in that:
AThe income multiplier uses NOI; direct capitalization uses gross rent
BThe income multiplier (GIM or GRM) uses gross income without deducting expenses; direct capitalization uses NOI (after expenses) and a cap rate✓ Correct
CThey produce identical results for the same property
DDirect capitalization is for residential; income multiplier is for commercial
Explanation
The Gross Income Multiplier (GIM) or Gross Rent Multiplier (GRM) uses gross income (before expenses) as a quick valuation shortcut — it doesn't deduct operating expenses. Direct capitalization uses Net Operating Income (after deducting operating expenses) divided by the cap rate, producing a more precise value that reflects the property's actual profitability.
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