Property Management
Effective gross income (EGI) for a rental property is calculated as:
AGross potential income minus vacancy and collection losses plus other income✓ Correct
BNet operating income plus mortgage payments
CGross potential income minus operating expenses
DTotal rent collected minus property taxes
Explanation
EGI = Gross Potential Income (GPI) − Vacancy and Collection Losses + Other Income (such as laundry or parking fees).
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Key Terms to Know
Earnest Money
A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
Option ContractA contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
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