Gross Scheduled Income in Commercial Real Estate

What is Gross Scheduled Income for a Commercial Property?

Gross scheduled income (GSI), sometimes referred to as gross potential income (GPI), is the amount of money a commercial property can generate, assuming 100% rental occupancy. It is often compared to gross potential rent (GPR), but gross scheduled income includes other, non-rental sources of income, such as parking spots or income from vending machines.

Gross Scheduled Income vs. Gross Potential Rent Example

For example if an apartment building has 15 units, each which rents for $2,000/month, the gross potential rent would be $30,000/month, or $360,000/year. However, if the building also has 35 parking spots, each which rents for $100/month, and can expect a vending machine income of an additional $250/month, than the gross scheduled income would be $33,750/month, or $405,000/year.

Gross Scheduled Income vs. Effective Gross Income

Another metric, effective gross income (EGI), reflects the income that a property owner is actually earning. It can be calculated by taking a property’s gross scheduled income and subtracting vacancies and credit loss, which occurs when a tenant does not pay part or all of their rent. While an investor may not immediately know the exact vacancy rate of a commercial property, an estimate of 5% is generally a good place to start.

In the same example mentioned above, if we estimate that the building has a 5% vacancy rate, for both apartments and parking spots, (assuming the vending machine income remains the same), the effective gross income would be approximately $385,000. In addition, EGI is one of the main metrics used to calculate net operating income (NOI), which itself is used to calculate debt service coverage ratio, cap rate, and other essential CRE metrics.

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