Effective Gross Income Calculator
Effective gross income, or EGI, is one of the most useful numbers in rental property analysis because it tells you what a property actually collects rather than what it could collect in a perfect year. No rental stays fully occupied forever: tenants move out, units sit empty between leases, and occasionally rent goes unpaid. Effective gross income accounts for all of that by starting with potential gross income, the rent a property would earn at full occupancy, and subtracting an allowance for vacancy and credit loss. This calculator does that arithmetic for you. Enter the potential gross income and a vacancy rate, and it works out the dollar amount lost to vacancy and credit, then subtracts that loss to give the effective gross income. The method is straightforward: vacancy and credit loss equals the vacancy rate times the gross income, and effective gross income is the gross income minus that loss. Investors use EGI as the foundation for net operating income, which drives valuation and lending decisions. Use this tool to test how different occupancy assumptions change the income you can count on. Every figure here is computed deterministically from the formula shown below, with a worked example that reconciles exactly to the calculator so you can follow each step.
Effective gross income subtracts vacancy and credit loss from potential gross income: EGI = potential gross income - (vacancy rate x potential gross income). With potential gross income of $60,000 and a vacancy rate of 5%, the vacancy and credit loss is $3,000.00, leaving an effective gross income of $57,000.00.
Effective gross income formula
Vacancy and credit loss = Vacancy rate x Potential gross income
Effective gross income = Potential gross income - Vacancy and credit loss
Vacancy rate is entered as a percent and used as a decimal
Potential gross income = rent at full occupancy
The vacancy rate is converted to a decimal before it is applied: 5 percent becomes 0.05. That decimal multiplies the potential gross income to give the dollar loss, which is then subtracted to leave the effective gross income.
Worked example
A small rental would collect 60,000 dollars a year at full occupancy. The owner assumes a 5 percent vacancy and credit loss.
- Vacancy and credit loss = 0.05 x 60,000 = 3,000
- Effective gross income = 60,000 - 3,000 = 57,000
The effective gross income is 57,000.00 dollars. These are the calculator's default inputs, so the result above matches the widget exactly.
How vacancy affects EGI
| Vacancy rate | Vacancy and credit loss | Effective gross income |
|---|---|---|
| 3% | $1,800.00 | $58,200.00 |
| 5% | $3,000.00 | $57,000.00 |
| 8% | $4,800.00 | $55,200.00 |
| 10% | $6,000.00 | $54,000.00 |
Based on potential gross income of 60,000 dollars. Use a rate that matches your market and history.
Effective gross income calculator: frequently asked questions
What is effective gross income?
Effective gross income, or EGI, is the income a rental property actually collects after allowing for vacancy and credit loss. You start with potential gross income, the rent the property would earn at full occupancy, then subtract the share lost to empty units and unpaid rent. EGI is the income figure used to work out net operating income and to test how a property performs.
How is vacancy and credit loss calculated?
Multiply the potential gross income by the vacancy rate expressed as a decimal. With potential gross income of 60,000 dollars and a vacancy rate of 5 percent, the loss is 0.05 times 60,000, which is 3,000 dollars. Subtracting that from the potential gross income gives an effective gross income of 57,000 dollars.
What vacancy rate should I use?
Use a rate that reflects your local market and property type. Stable, well located rentals might assume 3 to 5 percent, while properties in softer markets or with higher turnover may warrant 8 to 10 percent. If you have actual occupancy history, use it. The calculator lets you enter any rate so you can test a range of assumptions.
Does effective gross income include other income?
In a full analysis, potential gross income can include other income such as parking, laundry or storage fees alongside rent. This calculator treats the figure you enter as the total potential gross income, so include any other income in that number before applying the vacancy rate. EGI is then that total less the vacancy and credit loss.
How does EGI relate to net operating income?
Effective gross income is the starting point for net operating income, or NOI. To get NOI you subtract operating expenses, such as taxes, insurance, management and maintenance, from EGI. EGI tells you what comes in after vacancy; NOI tells you what is left after running costs but before financing.
Official sources
- Buying a house, renting and mortgage basics: US Consumer Financial Protection Bureau (CFPB). As at 25 June 2026.
Reviewed by the CalculatorHub team, edited by James Graham, 25 June 2026. See our methodology. This is general information, not financial, tax, legal or investment advice.