What term describes the total annual income a rental property produces after adjusting for vacancy losses?

The term that describes the total annual income a rental property produces after adjusting for vacancy losses is Effective Gross Income. This metric accounts for the reality that not all rental units will be occupied at all times. It begins with the potential gross income, which represents the maximum income a property could generate if it were fully rented. However, Effective Gross Income reflects a more realistic income figure by subtracting expected vacancy losses from this amount.

This distinction is crucial for property managers and investors because it provides a clearer picture of the actual income that can be anticipated from a property, making it an essential figure for evaluating a rental property's financial performance. Understanding Effective Gross Income helps in budgeting, forecasting, and ultimately assessing the viability of an investment.