Certified Apartment Portfolio Supervisor (CAPS) Practice Exam - Module 2

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What does the term EGI refer to in property management?

  1. Effective Gross Income

  2. Estimated Gross Income

  3. Equity Gross Investment

  4. Excess Gross Income

The correct answer is: Effective Gross Income

The term EGI stands for Effective Gross Income in property management. This financial metric is crucial as it represents the total income that a property is expected to generate after accounting for vacancies and collection losses. It provides a more realistic overview of a property’s income potential than just looking at the potential gross income, which does not take into consideration the factors that affect actual revenue. Understanding EGI is vital for property managers and investors because it helps in budgeting, forecasting cash flow, and making informed decisions regarding management and improvements. By calculating EGI, property managers can determine the amount of income that can actually be relied upon and plan expenses accordingly to maximize profitability and enhance property performance.

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