Understanding Effective Gross Income
How we calculate. EGI ≈ GPR × (1 − vacancy rate). Other income can be added outside this simple form. See our methodology and accuracy policy .
Real-world scenario: A typical Effective Gross Income case uses potential gross rent 100000 and vacancy rate (%) 8. Enter the same figures below to reproduce the worked path.
What is Effective Gross Income?
A standard bridge from scheduled rent to income available for OpEx and NOI.
- Vacancy as percent
- Other income not included here
- Credit loss sometimes combined with vacancy
The Formula
Worked Example
Common Use Cases
- Underwriting: income haircuts
- Budget models: vacancy stress
- NOI builds: EGI → OpEx → NOI
Pro Tips
- Use market vacancy for pro formas
- Add other income separately
- Track concessions as soft vacancy
| Scenario | When to use |
|---|---|
| Percent of a number | Finding a part of a whole (tax, tip, score) |
| Percent change | Comparing old vs new values |
Limitations: Effective Gross Income results are educational real-estate planning aids—not appraisals, loan offers, or investment advice. Confirm figures with qualified professionals.
Common mistakes
- Swapping part and whole: The denominator must be the full total, not a subset.
- Rounding too early: Carry extra decimal places through multi-step work before rounding the final percent.
- Mixing percent and decimal forms: Enter rates in the format the calculator labels expect.
When to use this calculator
- Use this page when your wording matches effective gross income and the form labels on screen.
- Use percent of a number for “what is X% of Y?” problems.
- Use number is what percent when you know part and whole and need the percent.
Still unsure about effective gross income? Start with the quick answer above, then open the linked calculator that matches your wording.
❓ Frequently Asked Questions
How do I use this effective gross income calculator?
For effective gross income, enter the values labeled on the form, then press Calculate. Compare the result to the worked example on this page.
What formula does this page use?
See the quick answer and formula box above for effective gross income—the same percentage calculator expression is applied to your inputs.
What if my result looks wrong?
When checking effective gross income, re-check part vs whole (or rate vs base), rounding, and whether percents were entered as 25 rather than 0.25 when the form expects percents.
Authoritative References
For real estate investing concepts, consult:
- National Association of Realtors — market context
- Investopedia — NOI — net operating income basics
- CFPB — homebuying education