When investing in income property, the most important assumption to understand is that real estate investment is a business. The second most important assumption is the value of an income property business will ultimately be determined by its earnings. That said, a gross rent multiplier does not consider earnings, operating expenses or provide information for debt service costs or terms — not a very good primary indicator for determining price. The best determinant for price is the capitalization ratio. The focus is on earnings, including expenses, and provides excellent information for determining the appropriate mortgage for the property. Unfortunately, as capitalization rates decline, the use of the gross rent multiplier by commercial brokers increases. Use NIPI to get a better picture of the financial value of income property.