What does PGI stand for in the context of real estate?

In the context of real estate, PGI stands for Potential Gross Income. This term refers to the total income a property could generate if it were fully leased, and all tenants paid their rent in full and on time. It represents the maximum possible revenue that a property can produce under ideal conditions, without considering any losses due to vacancies or collection issues.

Understanding PGI is crucial for real estate investors and assessors because it serves as a foundational figure when calculating other important metrics, such as net operating income and capitalization rates. It helps assess the income-generating potential of a property prior to any deductions for expenses or vacancies.

While terms like Projected Gross Income, Property Gross Income, and Professional Gross Income may sound similar, they do not accurately capture the idealized income potential that PGI encompasses. Projected Gross Income typically considers actual market conditions, while Property Gross Income often refers to income generated in a particular reporting period. Professional Gross Income is not a standard term used in real estate evaluation. Thus, Potential Gross Income is the most precise and widely recognized term in this context.