East West Commercial Real Estate

www.REIClub.com – Effective Gross Income (EGI) Is An Important Number in Commercial Real Estate. Here’s How To Calculate EGI For Your Real Estate Investment… Hi, this isFrank Chen with REIClub.com, the only site you need as a real estate investor. Today I’ve got quick video on how to calculate effective gross income (EGI) for commercial real estate investing. Effective Gross Income (EGI) The amount of income produced by a piece of property, plus misc income, less vacancy costs and collection issues. Investors use the EGI to determine how much they are willing to pay for the property based on how much they expect to make in earnings. Gross Potential Rent (GPR) The expected income a property will produce when fully occupied and all rents are collected. Example 10 unit apartment $800/month $8000/year x 12 months = $96000 Other Income/Revenues – laundry facilities – vending machines – car wash centers – additional storage – personal errand services – late fees from rent – parking permits – covered parking – etc… Example: $1000/mo in additional revenue $12000/year Total Potential Revenues (Gross Income) GPR + other income = $108000/year Vacancy The vacancy rate is the percentage of all the rental units that are vacant in relation to the total amount of units in the property. (Total Vacant Units) / (Total Units) = Vacancy Rate Average vacancy rates are around 5-10% Credits Money or percentage of income that is estimated to be lost due to non-payment of rents. Also includes …