Property Valuation
A Kansas property's 'potential gross income' (PGI) is defined as:
AActual rents collected during the year
BThe total income the property would generate at 100% occupancy at market rents✓ Correct
CNet income after all expenses
DIncome after vacancy and collection loss
Explanation
Potential Gross Income (PGI) is the maximum income a property could generate if fully occupied at market rents, before any deductions for vacancy or expenses.
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Key Terms to Know
Gross Rent Multiplier (GRM)
A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Net Operating Income (NOI)The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
Math Concepts
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