GIM stands for Gross Income Multiplier, which is also known as Gross Rent Multiplier (GRM). This is a method used to value plexes/apartments by dividing the price of the property by the current rental income. If the total current rental income is $20,000 and the asking price is $240,000 then the gross income multiplier =12. […]

A Capitalization Rate (CAP rate) is the percentage rate of return based on a piece of property’s income. This is the income divided by price. A property that costs $1,000,000 with a net income of $120,000 would have a CAP rate of 8.30 %.

LTV (loan-to-value) is simply the amount of the loan as a percentage of the total purchase price. A loan of $200,000 for a property worth $400,000 would mean an LTV of 50%.

DCR (debt-coverage-ratio) is the ratio of a property’s net operating income (income after expenses but before debt service) to the annual debt payments due on the loan. For example, a property with an NOI of $100,000 and annual debt payments totaling $80,000 would produce a DCR of 1.25 ($100,000/$80,000). This is the ratio that Lenders […]

A proforma tells you the Gross Income Multiplier (GIM) and the CAP (capitalization) rate for the property. But they come in many different versions, so there is no real standard to consider. Hopefully you will also learn what current rent rates are overall along with income and expenses and other building details. Ideally it would […]