Property Valuation
In South Carolina, when an appraiser uses the income approach for a residential rental property, which of the following is deducted from potential gross income to arrive at effective gross income?
AProperty taxes
BMortgage payments
CVacancy and collection loss✓ Correct
DManagement fees
Explanation
To go from Potential Gross Income (PGI) to Effective Gross Income (EGI), the appraiser deducts vacancy and collection loss. Operating expenses (including taxes and management) are then deducted from EGI to arrive at Net Operating Income (NOI).
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