Property Valuation
In the income approach to value, what is the difference between potential gross income (PGI) and effective gross income (EGI)?
APGI includes utilities; EGI does not
BPGI is total income if fully occupied; EGI is PGI minus vacancy and credit loss✓ Correct
CPGI is after expenses; EGI is before expenses
DThey are the same figure
Explanation
Potential Gross Income (PGI) is the total rental income assuming 100% occupancy at market rents. Effective Gross Income (EGI) = PGI minus vacancy and credit loss, representing anticipated actual income. Operating expenses are then subtracted from EGI to get NOI.
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