During a training session in April 2026, analyst Brooke Ellis explains effective gross income to a new licensee using a small rental property example. Which description best matches effective gross income?
Correct Answer
C) Potential gross income less vacancy and collection loss, plus other income
Effective gross income is the income remaining after potential gross income is reduced for vacancy and collection loss and then adjusted for any other income items, such as laundry or parking income. It comes before the deduction of operating expenses and therefore is not the same thing as NOI.
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More Valuation Market Analysis Questions
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Previous Question
In March 2026, investor Malik Ford values an office building using direct capitalization. Effective gross income is $120,000, annual operating expenses are $40,000, and the market cap rate is 8%. If operating expenses increase by $8,000 and everything else stays the same, what is the new indicated value?
Next Question
In April 2026, a lender reviews an appraisal of a three-unit property in which the appraiser included an income approach. Which support would best satisfy that part of the report?