What is the Effective Gross Income of a property with a potential gross rental income of $145,000, vending receipts of $5,000, and a 5% vacancy rate?

To determine the Effective Gross Income (EGI) of a property, the calculation involves taking the Potential Gross Income (PGI) and adjusting it for vacancy and collection losses, while adding any additional income, such as vending receipts.

1. Start with the Potential Gross Income: $145,000.

2. Calculate the vacancy loss by applying the 5% vacancy rate to the PGI. This is done by multiplying the PGI by the vacancy rate:

$145,000 * 0.05 = $7,250.

3. Subtract the vacancy loss from the PGI:

$145,000 - $7,250 = $137,750.

4. Finally, add any additional income, in this case, vending receipts of $5,000:

$137,750 + $5,000 = $142,750.

Thus, the Effective Gross Income is $142,750. This figure represents the income the property is expected to generate after accounting for vacancies and adding any other income sources, making it an essential part of the financial assessment of the property. Understanding how to calculate EGI is crucial for analyzing the profitability of real estate investments.