Property Management
Effective gross income (EGI) for a rental property is calculated as:
APotential gross income minus operating expenses
BPotential gross income minus vacancy and collection losses, plus other income✓ Correct
CNet operating income plus debt service
DGross rents divided by the number of units
Explanation
Effective Gross Income = Potential Gross Income − Vacancy and Collection Losses + Other Income (such as parking fees, laundry). EGI represents the realistic income a property is expected to generate.
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