The income approach is used extremely infrequently to

  determine the value of a property.  In the rare instance where it

  is used, it is almost always a multi-unit income producing

  property.  The income approach is an analysis based on the

  relationship of value as related to the market rent that a

  property can be expected to generate.

  Market rent is the rental income that a property would most

  likely receive on the open market as determined by current

  rentals paid for comparable space.  In addition, the appraiser

  will analyze the sales prices of comparable properties in order

  to determine the gross rent multiplier (GRM) that represents

  the relationship between market rent and market value.  This

  ratio is calculated by:  

  Sales Price divided by Gross Rent = Gross Rent Multiplier

  Based upon this analysis, the appraiser can used this estimated

  GRM and apply it to the projected gross rents of the subject 

  property.  For example, if the appraiser had determined that

  the market rent for the subject property is $700 per month, the

   estimated value of the subject property would be:

  Gross Rent x GRM = Market Value

  $700  X GRM = Market Value

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