Effective Gross Income Calculator Formula

Understand the math behind the effective gross income calculator. Each variable explained with a worked example.

Use the Effective Gross Income Calculator

Formulas Used

Effective Gross Income

egi = gpi * (1 - vacancy_pct / 100)

Gross Potential Income

gross_potential = gpi

Total Vacancy & Credit Loss

total_vacancy_loss = gpi * vacancy_pct / 100

Variables

VariableDescriptionDefault
gross_potential_rentGross Potential Rent(USD)96000
other_incomeOther Income(USD)4800
vacancy_pctVacancy & Credit Loss(%)6
gpiDerived value= gross_potential_rent + other_incomecalculated

How It Works

Effective Gross Income

EGI represents the realistic income a property will generate after accounting for vacancy and credit losses.

Formula

EGI = (Gross Potential Rent + Other Income) x (1 - Vacancy%)

Components

  • Gross Potential Rent: total rent if 100% occupied at market rates
  • Other Income: laundry, parking, fees, storage
  • Vacancy & Credit Loss: units unoccupied plus rent from tenants who fail to pay

    • Worked Example

    A building has $96,000 potential rent, $4,800 other income, and 6% vacancy/credit loss.

    gross_potential_rent = 96000other_income = 4800vacancy_pct = 6
    1. 01Gross potential income: $96,000 + $4,800 = $100,800
    2. 02Vacancy loss: $100,800 x 6% = $6,048
    3. 03Effective gross income: $100,800 - $6,048 = $94,752

    Ready to run the numbers?

    Open Effective Gross Income Calculator