PASS GEORGIA
REAL ESTATE EXAM PREPGEORGIA REAL ESTATE EXAM GLOSSARY
Effective gross income, or EGI, is potential gross income minus vacancy and collection loss, plus other property income.
Valuation and Market Analysis
Income valuation
Define, distinguish, apply, retrieve
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PASS GEORGIA
REAL ESTATE EXAM PREPGEORGIA REAL ESTATE EXAM
GLOSSARY TERM GUIDEBuild the complete exam definition
Learn the rule, separate it from the nearest distractor, then apply it to a Georgia fact pattern.
What does Effective gross income mean?
Effective gross income, or EGI, is potential gross income minus vacancy and collection loss, plus other property income. It is the income actually expected to be available before operating expenses.
How do you separate the nearest exam answer?
Potential gross income assumes full occupancy and collection. EGI adjusts for vacancy and adds other income. NOI then subtracts operating expenses from EGI.
What changes or stays the same in Georgia?
This national income-property formula is unchanged in Georgia. Keep annual and monthly periods consistent and follow the sign of each adjustment.
Potential rent is $180,000, vacancy and collection loss is $9,000, and laundry income is $6,000. EGI is $177,000.
Other income is added after vacancy loss, while operating expenses are not subtracted until the NOI step.
PASS GEORGIA
REAL ESTATE EXAM PREPGEORGIA REAL ESTATE EXAM
GLOSSARY TERM GUIDERetrieve the rule under exam conditions
Answer before reading the explanation. Then explain why every distractor belongs to a different term.
A building has potential gross rent of $240,000 a year, vacancy and collection loss of 6 percent, parking income of $7,200, and operating expenses of $90,000. What is the effective gross income?
- A
$232,800
- B
$225,600
- C
$218,400
- D
$142,800
EGI starts with potential gross income, subtracts vacancy and collection loss, then adds other income: $240,000 - $14,400 + $7,200 = $232,800. Leaving out the parking income gives $225,600. Operating expenses are not subtracted until the NOI step, which would give $142,800.
Mark each box only when you can perform the skill without looking.
I can define the term in one precise sentence.
I can separate it from the closest look-alike.
I can explain the Georgia rule or confirm that the national rule applies.
I can answer the practice check and explain every option.
PASS GEORGIA
REAL ESTATE EXAM PREPGEORGIA REAL ESTATE EXAM
GLOSSARY TERM GUIDEConnect the term to the wider exam
Use these relationships to move from isolated recall to a connected exam model.
Valuation and Market Analysis complete lesson
https://www.passgeorgiarealestate.com/math/net-operating-income
Official exam administration and content-outline source.
https://test-takers.psiexams.com/api/content/bulletin/4672Congressionally authorized source for USPAP and appraisal standards.
https://appraisalfoundation.org/pages/uspap