Property Valuation
A Connecticut property is being appraised using the income approach. The appraiser is calculating the 'effective gross income' (EGI). The formula is:
AEGI = Net Operating Income + Operating Expenses
BEGI = Potential Gross Income – Vacancy and Collection Loss✓ Correct
CEGI = NOI ÷ Cap Rate
DEGI = Market Rent × 12
Explanation
Effective Gross Income (EGI) = Potential Gross Income (PGI) minus vacancy and collection loss. PGI assumes 100% occupancy at market rents.
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