Effective gross income – probable gross rental income plus other income minus rental and loan costs. It can be calculated, taking the possible gross profit from the investment, adding the rest of the income, which are generated by this real estate, also take away losses from downtime and fees.
Effective gross income
This is the main variable in determining the price of a rental property and a real positive foreign exchange flow., which she can generate. Currency flow from rent – complex calculation, it includes all forms of income, which comes from belonging, net of actual costs, which are related to rental income.
Gross Possible Rental Profit – hypothetical amount, which the financier would receive, having no questions with rent. Implied, that the property will be rented out every day of the year, also tenants will pay the approved rent, discussed in the agreement.
The indicator is important for the real estate financier, as it allows you to see how the object under study can generate a positive currency flow, to cover monthly operating expenses, also any security rights or restrictions, which the financier will have to undertake.
