If a property has a Gross Potential Rental Income of $800,000 and expense reimbursements of $100,000, with a 10% vacancy and credit loss and miscellaneous income of $25,000, what is the Effective Gross Income?

To find the Effective Gross Income (EGI), you start with the Gross Potential Rental Income and then adjust it for vacancy and credit loss, add any miscellaneous income, and consider any expense reimbursements.

1. Gross Potential Rental Income: This is the maximum income the property could generate, given at $800,000.

2. Vacancy and Credit Loss: A 10% loss means you would calculate this as 10% of the Gross Potential Rental Income. That is 10% of $800,000, which equals $80,000. This amount is deducted from the Gross Potential Rental Income.

3. Miscellaneous Income: This is any additional income generated from the property, which is provided as $25,000.

4. Expense Reimbursements: While these reimbursements can contribute to overall cash flows, they typically do not factor into the calculation of EGI directly as it pertains to rental income.

To calculate the Effective Gross Income:

• Start with the Gross Potential Rental Income: $800,000

• Subtract the vacancy and credit loss: $800,000 - $80,000 = $720,000

• Add the miscellaneous income: $720,000 + $25