Loss of useful life and desirability of a property through economic forces, such as change in zoning, changes in traffic flow, etc. — rather than deterioration.
Effective Gross Income (EGI) is the true positive cash flow of an apartment community. EGI is calculated by the sum of the gross potential rent and the other income minus the income lost due to vacancy, loss-to-lease, concessions, employee units, model units and bad debt.
For example, if a 200-unit apartment community has a gross potential rent of $2,263,624, loses $158,454 due to vacancy (7% vacancy rate) and $159,362 in credit costs (loss-to-lease, concessions, employee units, model unit, bad debt, etc.) and collects $177,462 in other income, then EGI is $2,123,235.
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