The Net Income Multiplier or NIM is a factor that is used to estimate the market value of income producing properties. It is equal to the market value of a property divided by the net operating income or NOI.

Example 1: A residential income property has an NOI of $15,000 and a market value of $150,000.

Example 2: The average net income multiplier for recent sales of comparable properties in a particular area is 9 and the net operating income for a similar property we are considering buying is $20,000.

The net income multiplier and the cap rate are financial tools used to estimate the market value of income properties. The cap rate is better known and more widely used. The cap rate and the NIM produce identical results when estimating the market value of an income property since the net income multiplier is the inverse of the cap rate. The cap rate is equal to 100 divided by the NIM. The NIM is equal to 100 divided by the cap rate