What does the effective gross income (EGI) represent for a property?

Effective gross income (EGI) is a critical measure in property management and real estate investment that represents the total annual income generated by a property after accounting for vacancies and credit losses. It provides a more realistic view of a property's income potential compared to gross income, which does not consider these factors.

While total annual income might seem broader, EGI specifically reflects the expected income that a property can generate under realistic operating conditions. This makes it an essential figure for evaluating the performance and profitability of income-producing properties, such as rental properties.

The other choices do not accurately describe EGI. Total expenses refer to the costs incurred in operating the property, pretax revenue is a broader financial term that may include other income types, and net profit refers to the income remaining after all expenses have been deducted, which is different from EGI that focuses solely on income generation before expenses.