What is Effective Gross Income? Effective Gross Income, or EGI, is the actual income a property generates from rental and other incomes. Use the following formula to calculate EGI: Gross Potential Rental Income is when 100% of available units are occupied and the property owner earns 100% of the rental income assuming no bad debt plus other income. Other Income: Examples of other income that a property can generate include parking fees, pet fees, late fees, and storage unit fees. Vacancy: Vacancy is the income lost due to having space not occupied and paying rent. For a more detailed di ..read more

   What is a hard cost? Hard costs are expenses directly incurred to complete the construction of a project. These expenses are linked to tangible expenditures associated with the building structure, the construction site, and the landscape such as wood, cement, carpet, drywall, utilities, HVAC systems, pavement, grass and trees. In addition to physical material, hard costs also assume the expense of labor used to complete the project. Why are hard costs important? Hard costs are difficult to estimate as economic factors such as rising labor and material prices can increase proj ..read more

   What is Payroll? Payroll is the process of a business paying its employees as compensation for hours worked. It includes distributing money in the form of checks or direct deposit to the company’s personnel. Payroll is not exclusively paying employees on a month to month basis (or however often the payments occur), but it also includes keeping records of the payments and paying taxes of behalf of the employee’s wages. Typically, payroll is handled by the accounting department or human resources department in a business, but if the business is smaller, an associate or the owne ..read more

  What is Multifamily Other Income? In multifamily units, Other Income is a term that refers to all sources of income that are not included in the rental income. It is calculated by summing all sources of income that a property has, excluding the rent that tenants pay. In some cases, Other Income is referred to as Ancillary Income. Other Income is an important figure to know, since it is an integral piece of the calculation that determines the Effective Gross Income of a property. To learn more about Effective Gross Income, please read our blog here. Without having an accurate grasp on th ..read more

 What is Effective Gross Income? Effective Gross Income, or EGI, is the actual income a property generates from rental and other incomes. Use the following formula to calculate EGI: Gross Potential Rental Income is when 100% of available units are occupied and the property owner earns 100% of the rental income assuming no bad debt plus other income. Other Income: Examples of other income that a property can generate include parking fees, pet fees, late fees, and storage unit fees. Vacancy: Vacancy is the income lost due to having space not occupied and paying rent. For a more detailed dis ..read more

  It can be hard to find the proper education when wanting to learn a new skill or refresh your knowledge. Also, finding one that is worth your time, money and effort can be difficult when there are so many choices.  Real Estate Financial Modeling is an in-demand skill for anyone looking to be in private equity. If you are a student looking to learn about financial modeling and want to break into the commercial real estate industry, this is the right place for you. We have gathered some of the top online training platforms in the industry to help you make the best decision. If you a ..read more

   What is Franchise Tax? A Franchise Tax is a tax levied on certain enterprises in some states and is paid in addition to real estate taxes and income taxes. In essence, it is a tax that certain businesses pay for the right to operate within a state’s confines. Currently, Alabama, Arkansas, California, Delaware, Georgia, Illinois, Louisiana, Mississippi, New York, North Carolina, Oklahoma, Tennessee, and Texas are the only states that impose Franchise Taxes. Many of these states calculate Franchise Tax using differing methods. Typically, it is calculated based on a given compan ..read more

  What are Utilities? Utilities are additional essential services needed for a property to be fully functional and are usually paid on a monthly basis. They include electricity, air conditioning, natural gas, water, sewage, trash, and sometimes internet and cable.  Why are they important? When determining the amount of rent to charge a tenant, it is important to consider carrying costs such as utilities, insurance, and management fees. These fees play a large role in determining your return on investment, cap rate, and cash flow.  Even more importantly, it is necessary to decide ..read more

  Sales proceeds is the amount of cash received from the sale of a good or an asset. Typically, these sales proceeds are discussed as gross or net. Gross sales proceeds are the total sales amount received from the transaction while net sales proceeds are the total sales amount after paying for expenses, fees, and taxes. Gross Sales Proceeds vs. Net Sales Proceeds Gross sales proceeds are the payment received for selling an asset, whether tangible or intangible. This amount could include expenses related to the transaction, the cost of production, or other costs. For example, if a home i ..read more

 What is Gross Potential Rental Income? Gross Potential Rental Income displays the highest possible rental income that can be collected from a property. This figure is calculated monthly by multiplying the number of units or square footage (before factoring in any general vacancy) by the market monthly rent. This value is essential to calculating Effective Gross Income, which can then be used to calculate Net Operating Income. Gross Potential Rental Income vs. Effective Gross Income Gross Potential Rental Income includes the potential rental income leased at market rates, w ..read more