Effective Gross Income (EGI)
Also called: EGI
Effective gross income is gross potential rent less vacancy, concessions, and credit loss, plus other income such as parking, pet fees, and utility reimbursements.
EGI is the realistic revenue line: what the property actually collects in a normal year. It sits between gross potential rent and net operating income and is the denominator for the operating expense ratio.
Other income deserves more attention than it usually gets. Utility billback programs, pet rent, parking, and fee income can represent 3% to 8% of EGI at a well-run property, and introducing or optimizing these is often the fastest revenue improvement available on a value-add plan because it does not require a unit turn.
How to calculate effective gross income
EGI = Gross Potential Rent - Vacancy - Concessions - Credit Loss + Other IncomeCalculate effective gross income
Related terms
- Gross Potential Rent (GPR)
Gross potential rent is the total annual rent a property would collect if every unit were occupied at full market rent for the entire year, with no vacancy, concessions, or delinquency.
- Net Operating Income (NOI)
Net operating income is a property's effective gross income minus all operating expenses, excluding debt service, capital expenditures, depreciation, and income taxes.
- Economic Vacancy
Economic vacancy is the total percentage of gross potential rent not actually collected, including physical vacancy plus concessions, delinquency, non-revenue units, and loss to lease.
- Operating Expense Ratio (OER)
The operating expense ratio is total operating expenses divided by effective gross income, expressed as a percentage, and it measures what share of collected revenue is consumed by running the property.