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Commercial and investmentSubject 16 of 19

Effective gross income

Income expected or received after vacancy and collection loss, plus other property income included in the analysis.

Also called: EGI

Direct answer

What does Effective gross income mean?

Income expected or received after vacancy and collection loss, plus other property income included in the analysis.

Exam cue: Subtract vacancy and credit loss from potential gross income, then add qualifying other income.

What does it look like in a question?

New York example

$240,000 potential rent less $12,000 vacancy loss plus $3,000 laundry income produces $231,000 EGI.

Common exam trap

What should you not confuse it with?

Effective gross income is not NOI because operating expenses have not yet been deducted.

Related commercial and investment terms

Cash flowMoney remaining or changing hands during a period after the receipts and payments included in the stated calculation.Gross leaseA lease in which the landlord pays specified property operating expenses from the rent received.LeverageThe use of borrowed money to finance part of an investment.LiquidityThe ease and speed with which an asset can be converted to cash without a substantial loss in value.Net leaseA lease under which the tenant pays specified property expenses in addition to rent.Net operating incomeProperty income remaining after vacancy and operating expenses but before debt service and income taxes in the standard real estate formula.
Sources used2 references with section locators

The curriculum citation confirms exam scope. Definition and rule citations support the explanation itself. Links and locators were checked on August 26, 2026.

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