Understanding Effective Gross Income
How we calculate. EGI ≈ GPR × (1 − vacancy rate). Other income can be added outside this simple form. The form uses the same arithmetic as the worked examples on this page. See our methodology and accuracy policy.
Real-world scenario: A typical Effective Gross Income case uses potential gross rent 100000 and vacancy rate (%) 8. Enter the same figures below to reproduce the worked path.
What is Effective Gross Income?
A standard bridge from scheduled rent to income available for OpEx and NOI.
- Vacancy as percent
- Other income not included here
- Credit loss sometimes combined with vacancy
The Formula
Worked Example
Common Use Cases
- Underwriting: income haircuts
- Budget models: vacancy stress
- NOI builds: EGI → OpEx → NOI
Pro Tips
- Use market vacancy for pro formas
- Add other income separately
- Track concessions as soft vacancy
Limitations: Effective Gross Income results are educational real-estate planning aids—not appraisals, loan offers, or investment advice. Confirm figures with qualified professionals.
FAQ
Where is other income?
Add laundry/parking/etc. to EGI outside this tool, or include them in the potential rent input if you prefer.
What if vacancy is 100%?
EGI becomes $0 in this simple model.
Authoritative References
For real estate investing concepts, consult:
- National Association of Realtors — market context
- Investopedia — NOI — net operating income basics
- CFPB — homebuying education