Property Valuation
In the South Dakota income approach, 'vacancy and collection loss' is subtracted from potential gross income to arrive at:
ANet operating income
BEffective gross income✓ Correct
CCash flow after debt service
DAdjusted sale price
Explanation
Effective Gross Income (EGI) = Potential Gross Income (PGI) minus Vacancy and Collection Losses. EGI represents the anticipated income the property will actually collect.
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