Effective gross income
Gross scheduled income minus vacancy and collection losses, plus any other income like laundry or parking. More realistic than GSI.
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Part 1 of 4
Why a seller cares
Effective gross income is the rent a buyer expects to actually collect, after vacancy and bad debt, plus any extras. It is the top line an investor uses to value your rental, and it is smaller than the rent roll.
Part 2 of 4
A simple example
Your fourplex's rent roll totals $48,000 a year. The buyer subtracts 5% for vacancy and adds $1,200 of laundry income, for an EGI of $46,800.
| The line | The number |
|---|---|
| Gross scheduled rent | $48,000 |
| Minus vacancy at 5% | $45,600 |
| Plus laundry | $46,800 |
EGI is the rent roll with reality subtracted and the side income added.
Part 3 of 4
What people get wrong
That full occupancy today means no vacancy in the numbers. Buyers always subtract some, because tenants always leave eventually.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
In your Room, this word explains itself where it appears.
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