What does EGI stand for in property valuation?

The term EGI stands for Effective Gross Income in property valuation. Effective Gross Income is a key concept used to assess the income potential of a property. It represents the total income that a property can be expected to generate after accounting for potential losses that may arise from vacancies and collection losses. This metric is instrumental for appraisers and investors as it provides a more realistic picture of the property’s income stream than just looking at gross potential income.

Calculating Effective Gross Income involves taking the Gross Potential Income— which is the total income the property could generate if fully occupied— and then subtracting any estimated losses due to vacancies and credit losses. This gives a more accurate reflection of the income that can actually be expected, enabling better financial forecasting and valuation.

The other options, while they may sound plausible, do not reflect the standard usage or definition in property valuation. Excess Gross Income, Estimated Gross Income, and Exclusive Gross Income do not hold the same significance or accuracy in terms of what EGI stands for in the context of property income assessment.