Potential Gross Income [3026]

An apartment building has 20 units that rent for $500 monthly and 30 units that rent for $750 monthly.  Collection loss is estimated at 3% and vacancy loss is estimated at 7%.  What is the potential gross income (PGI)?

20 units x $500 x 12 = $120,000

30 units x $750 x 12 = $270,000

Potential Gross Income = $120,000 + $270,000 = $390,000

Potential gross rent is generally calculated on an annual basis unless stated otherwise.

Vacancy loss and collection loss are not considered when estimating the potential gross rent so the vacancy and collection rates are useless in this problem.