Property Valuation
What is 'effective gross income' in the income approach to appraise an Oregon rental property?
AThe total rent collected without any deductions
BPotential gross income minus estimated vacancy and credit losses✓ Correct
CNet operating income after all operating expenses
DGross rent plus all other property income
Explanation
Effective Gross Income (EGI) = Potential Gross Income (PGI) − Vacancy & Credit Losses. PGI is the income a property would generate at 100% occupancy. EGI represents the realistic expected income after accounting for units that may be vacant or tenants who don't pay. Operating expenses are then deducted from EGI to arrive at NOI.
Related Oregon Property Valuation Questions
- In Oregon, the county assessor's 'real market value' (RMV) is meant to represent:
- The 'cost approach' to appraisal uses which formula?
- An appraiser is comparing two Oregon properties: one on the east side of Portland (valued at $450,000) and one on the west side (valued at $650,000). The higher west-side value likely reflects:
- An appraiser notes that a property has 'curable' physical deterioration. 'Curable' means:
- The cost approach to appraisal is MOST applicable when:
- Which of the following would INCREASE the value of a property according to appraisal principles?
- When appraising an Oregon property, the appraiser finds that no comparable sales within 1 mile are available. What should the appraiser do?
- In the sales comparison approach, an 'arm's length transaction' is preferred because:
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