In October 2026, appraiser Caleb Moore is reviewing an income statement for Oak Place. The property's NOI is $67,500, the expense ratio is 25%, and vacancy and collection loss is 10% of potential gross income. Assuming there is no other income, what is the property's potential gross income?
Correct Answer
C) $100,000
Step 1: If the expense ratio is 25%, NOI equals 75% of effective gross income. So EGI = $67,500 ÷ 0.75 = $90,000. Step 2: If vacancy is 10% of PGI, EGI equals 90% of PGI. Step 3: PGI = $90,000 ÷ 0.90 = $100,000.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A transfer tax is a tax imposed on the transfer of ownership of real estate.
Reconciliation is the final step in the appraisal process where the appraiser analyzes the value indications from all applicable approaches and arrives at a single final opinion of value. It is not a simple average of the three values.
The comparable sales approach estimates a property's value by comparing it to similar properties that have recently sold in the same market area. It is the most widely used and reliable approach for appraising residential properties.
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