Built in 1992, the investment property has a
gross potential income of over $500,000 in rental income plus miscellaneous income sources.
1)
Gross Potential Income, 2) Loss to Lease, 3) Vacancy and Collection loss.
Gross potential income in $6k range without buying more units.
Gross potential income, vacancy, operating expenses, replacement reserves, and net operating income are the same as used for the LIHTC apartment in Table 1.
Identification and quantification of revenue sources to estimate
gross potential income (GPI)
For ease in illustration, let's assume this 250|unit property has $1,250,000
gross potential income (GPI) with a 20 percent vacancy/delinquency (also known as economic vacancy) factor, resulting in $1 million effective gross income (EGI).
Because service-derived income pay or may not be attributed to the real property, an appraiser might find it inappropriate to include this income in the property's
gross potential income.
For example, while the ratio of operating expense to
gross potential income of the comparables is similar, the ratio of NOI to
gross potential income is considerably lower for sale 3.
