What is the effective gross income multiplier for a property that sold for $2,000,000 with potential gross income of $270,000 and an expected vacancy loss of $20,000?

To determine the effective gross income multiplier (EGIM), you first need to calculate the effective gross income (EGI) of the property. The EGI is derived from the potential gross income (PGI) after accounting for vacancy loss.

In this case, the potential gross income is $270,000, and the expected vacancy loss is $20,000. So, the effective gross income is calculated as follows:

Effective Gross Income (EGI) = Potential Gross Income (PGI) - Vacancy Loss

EGI = $270,000 - $20,000 = $250,000

Next, to find the effective gross income multiplier, you divide the sale price of the property by the effective gross income:

EGIM = Sale Price / EGI

EGIM = $2,000,000 / $250,000 = 8.00

This calculation shows that the effective gross income multiplier for the property is 8.00, which aligns with the correct response. The EGIM provides investors with a means to evaluate the relationship between a property's sales price and the income it generates, helping in comparative market analysis.