What is the gross income multiplier used to measure?

The gross income multiplier is a financial metric used to evaluate investment properties by providing a ratio that compares the price of the property to its annual income generated before any expenses are deducted. This ratio helps investors quickly assess whether a property is priced appropriately in relation to its income potential. By using this tool, investors can make more informed decisions about purchasing or valuing real estate based on expected income. The calculation is often straightforward, making it an accessible metric for initial evaluations of investment opportunities.

The other choices, while related to various aspects of real estate investment, do not capture the specific function of the gross income multiplier, which is focused solely on the relationship between property price and income generation, excluding considerations of expenses, tax obligations, or property appreciation.