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Effective Gross Income (EGI):
Effective Gross Income (EGI) is a term used in real estate to describe the total money a property owner can expect to make from their property before any expenses are taken out. It includes not just the rent paid by tenants, but also any additional income, like fees from parking or laundry machines. However, EGI also accounts for any money lost when units are empty or tenants don't pay rent.
For example, imagine you own an apartment building with 10 units. Each unit rents for $1,000 per month, so you would expect to make $10,000 per month. However, one unit is vacant, and another tenant is behind on rent. You also make $200 per month from a laundry machine. In this case, your EGI would be: ($10,000 - $1,000 - $1,000) + $200 = $8,200.
"Wit & Whimsy with the Dumb Ox: Unlocking Knowledge with Rhyme:"
In Real Estate, there's a term, EGI,
It's the money you make, as the owner, you see.
Rent from tenants and more, that's the start,
But subtract empty units, so you're playing it smart.
A building with ten homes, each renting for cash,
A thousand a month, that's a big money stash.
But one home is empty, and one tenant's late,
Plus, laundry machines bring two hundred, how great!
So, what's the EGI, let's add and subtract,
Ten thousand minus two thousand, that's a fact.
Add in two hundred, and you'll clearly see,
Eight thousand two hundred is the EGI.