The EGI (Effective Gross Income) Calculator is designed to help property owners, investors, and managers determine how much income a rental property is likely to generate after accounting for losses and additional earnings. While the potential gross income gives a perfect picture based on 100% occupancy and full rent payments, EGI gives a more realistic view by subtracting common income losses and adding other revenue sources.
This calculator is often used in real estate investment analysis, financial forecasting, and property evaluation. It helps in setting expectations and making informed decisions based on actual earning potential rather than ideal situations.
Formula of Egi (Effective Gross Income) Calculator
EGI = PGI − Vacancy Loss − Credit Loss + Other Income
Where:
EGI = Effective Gross Income
PGI = Potential Gross Income (total rent income if all units are rented with full payment)
Vacancy Loss = Expected income loss from empty units
Credit Loss = Income lost when tenants do not pay
Other Income = Any extra income from parking, laundry, vending, late fees, or other services
This formula makes it easy to get a true sense of how much income a property is bringing in each month or year.
Common Income Scenarios and Reference Table
This table summarizes common scenarios based on vacancy and credit loss percentages, with other income included. It offers quick insight into how different factors affect the effective income of a rental property.
| PGI (Annual) | Vacancy Loss (5%) | Credit Loss (2%) | Other Income | Effective Gross Income |
|---|---|---|---|---|
| 100,000 | 5,000 | 2,000 | 3,000 | 96,000 |
| 150,000 | 7,500 | 3,000 | 4,500 | 144,000 |
| 200,000 | 10,000 | 4,000 | 6,000 | 192,000 |
| 75,000 | 3,750 | 1,500 | 2,000 | 71,750 |
| 50,000 | 2,500 | 1,000 | 1,200 | 47,700 |
This table helps property managers and landlords estimate their real income without going into detailed calculations every time.
Example of Egi (Effective Gross Income) Calculator
Let’s say a rental building has the following numbers:
PGI = 120,000
Vacancy Loss = 6,000
Credit Loss = 2,400
Other Income = 3,600
Using the formula:
EGI = 120,000 − 6,000 − 2,400 + 3,600
EGI = 111,600 + 3,600 = 115,200
So, the effective gross income for this property is 115,200 per year.
Most Common FAQs
EGI gives a realistic income number. PGI assumes no vacancies or payment problems, which is rarely true in real estate. EGI accounts for actual earnings by subtracting common losses and adding extra income.
Yes, EGI is a key part of evaluating a property's worth, especially when calculating metrics like net operating income (NOI) or cap rate. It gives investors a better picture of what a property can truly generate.
Yes, but it’s better to separate recurring income from one-time sources. This makes planning and forecasting more stable and reliable.