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Gross Potential Income

The Top-Line Income Starting Point for Underwriting

 

Gross Potential Income (GPI) is the maximum rental income a property could generate if every unit were rented at market rent for the full period, with no vacancy, no concessions, and no unpaid rent. Think of GPI as the “top-line ceiling” for rental income—it’s your starting point before you apply real-world loss factors.

 

Why GPI matters

GPI is used to:

  • Set a baseline for underwriting and cash flow projections

  • Compare properties consistently (apples-to-apples)

  • Estimate upside when rents are below market

  • Support valuation analysis (because income drives value)

 

How to Calculate GPI

For a simple property where units are similar:

GPI (Monthly) = Total Number of Units × Average Market Rent per Unit
GPI (Annual) = Monthly GPI × 12

Example (same-unit property):
A four-unit building where each unit could rent for $1,000/month at market:

  • Monthly GPI = 4 × $1,000 = $4,000

  • Annual GPI = $4,000 × 12 = $48,000

 

Many properties have different unit types (e.g., 1-bed vs. 2-bed). In that case, calculate GPI by unit type:

GPI (Monthly) = Σ (Units of Type i × Market Rent of Type i)

Example (unit mix):

  • 2 × 1-bed @ $1,300 = $2,600

  • 2 × 2-bed @ $1,700 = $3,400
    Monthly GPI = $2,600 + $3,400 = $6,000
    Annual GPI = $6,000 × 12 = $72,000

 

Market rent vs. current rent

GPI is typically based on market rent (what the units should rent for today), not necessarily what tenants are currently paying. If a property’s current rents are below market, GPI helps you quantify the revenue potential—but you still need a realistic plan and timeline to reach it.