Rent Roll to Effective Gross Income
Vacancy/credit loss, effective gross income (EGI = potential rent x (1 - vacancy% - credit%) + other income).
Example
You enter
- Potential gross rent ($/yr) 120000
- Vacancy rate (%) 5
- Credit-loss rate (%) 2
- Other income ($/yr) 6000
You get
- Vacancy credit loss 8400
- Effective gross income $117,600
Checked against published worked examples from: Appraisal Institute (income approach).
Details, formula, and sources
ScopeVacancy/credit loss, effective gross income (EGI = potential rent x (1 - vacancy% - credit%) + other income), and the loss as a percent of potential. Per the Appraisal Institute income approach; feeds cap rate and DSCR.
Formula or tableVacancy/credit loss = potential gross rent x (vacancy% + credit%)/100; EGI = potential rent - loss + other income; loss percent = loss / potential x 100.
Source and editionAppraisal Institute income-approach EGI definition, by name.
Free accessAppraisal Institute methodology; the EGI definition is standard practice. Appraiser and lender govern the underwritten figures.
What governsEstimate. Lender governs final underwriting and rate / fee disclosure. Appraiser governs the appraised value. State law and the agency's program guidelines may impose stricter limits than the published thresholds.
API field namespotential_gross_rent, vacancy_rate_pct, credit_loss_pct, other_income, vacancy_credit_loss, effective_gross_income
- Other income entered as an annual figure, not vacancy-adjustedAppraisal Institute income approach