Property Valuation
When using the income approach, potential gross income (PGI) is different from effective gross income (EGI) because:
APGI includes only commercial properties
BEGI subtracts vacancy and collection losses from PGI✓ Correct
CPGI is the actual rent collected
DEGI includes potential rent from vacant units
Explanation
Potential Gross Income (PGI) is the maximum rental income if all units were fully occupied. Effective Gross Income (EGI) = PGI minus vacancy and collection losses, providing a realistic estimate of actual rental income.
Related Oklahoma Property Valuation Questions
- External obsolescence in Oklahoma might be caused by:
- Which appraisal approach is most commonly used to value single-family residential properties?
- A recently sold comparable property is 200 square feet larger than the subject property. If the market indicates a value of $75 per square foot, what adjustment should the appraiser make to the comparable?
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- The principle of substitution states that:
- An appraiser determines a subject property's value using the gross rent multiplier (GRM). The property rents for $1,800/month and comparable properties sell for 120 times monthly rent. The estimated value is:
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