What is the principle of the Keynesian multiplier?
Expansionary cyclical economic policy aimed at stimulating production and employment. For example, by increasing the purchasing power of the poorest households, which have the strongest propensity to consume, and by lowering interest rates to encourage indebtedness and spending. investment.
The gross income multiplier is calculated by dividing the sale price of a building by its gross income. By gross income we mean the sum of all the income generated by this building.
If we take the previous example: The income from the property is $35,000. So if we use the multiplier of 8.89%, we get a value of $311,000.
You then take: Value Sold ÷ Annual Gross Revenue = Gross Revenue Multiplier (MRB) For example: If the average revenue property sold in an area is $400,000 and the total annual revenue is $45,000, the will be 8.89%.
Calculating the profitability of an income property can be long and tedious, but it can also be easy and very quick if you use the right techniques and the right ratios. An easy-to-use ratio is the “Gross Income Multiplier” (MRB), also known as the GRM (Gross Income Multiplier).