What is meant by effective gross income (EGI) in property appraisal?

Effective gross income (EGI) refers to the total income generated from a property before any operating expenses are deducted. It includes all potential income such as rent, fees, and any other revenue streams associated with the property. However, EGI takes into account potential losses from vacancies and credit losses, ensuring a more accurate representation of the income a property can generate under normal operating conditions.

This distinction is crucial because EGI provides a basis for understanding the property's revenue-generating potential, allowing appraisers to assess the financial performance accurately. The calculation of EGI is often the first step in financial analyses, leading to net operating income when expenses are subtracted.

The other options focus on different aspects of income related to properties. For instance, the income after expenses are deducted refers to net operating income (NOI), which is a subsequent figure derived from EGI. The annual rent collected from tenants is a specific component of effective gross income but does not account for factors like vacancies. Projected income based on future rentals addresses expected income but lacks the current operational context that EGI provides.