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Effective Gross Income Multiplier (EGIM):
Effective Gross Income Multiplier (EGIM) is a term used in real estate to help figure out how much a property is worth by comparing the property's price to the money it makes before expenses, which is called the Effective Gross Income (EGI). It's like trying to find out how many times you need to multiply the property's EGI to get its price. This number can help buyers and sellers see if the property is a good deal.
For example, imagine there's an apartment building for sale at $500,000, and its EGI is $50,000 per year. To find the EGIM, you would divide the property price by the EGI: $500,000 / $50,000 = 10. This means the EGIM is 10, and it would take 10 years of the building's EGI to equal the price.
"Wit & Whimsy with the Dumb Ox: Unlocking Knowledge with Rhyme:"
In Real Estate, my dear, there's a thing called EGIM,
It helps us find value, so we don't just swim.
We take the property's price, that's where we begin,
And divide by EGI, oh, what a win!
An apartment for sale, half a million, you see,
With EGI of fifty thousand, how could it be?
Divide the price by EGI, and what do we find?
An EGIM of ten, now isn't that kind?
So remember, my friend, when you're searching with glee,
EGIM's the key to value, as easy as can be.
It shows us the worth, of properties galore,
Helping us choose, so we know the right score.