Effective gross income (EGI)
Asset-Backed Securities glossary · Collateral & Cash Flow Modeling
Definition
Rental income less vacancy losses plus other income; used in CRE underwriting.
Effective gross income (EGI) in plain English
Effective gross income is a realistic estimate of how much money a rental property actually brings in over a year. You start with the full rent you'd collect if every unit were occupied, subtract what you lose from empty units (vacancy), then add extra income from things like parking, laundry, or vending machines. It's the difference between the fantasy number ('if everything's perfect') and the honest number lenders use to size up a commercial property — because no building stays 100% full forever. In short, it's the rent you can genuinely expect to see, not the rent on the brochure.
Also called: EGI
Related Asset-Backed Securities terms
Asset-Backed Securities practice questions · Asset-Backed Securities flashcards · Asset-Backed Securities study guide