What does "Potential Gross Income (PGI)" mean in real estate?

Potential Gross Income (PGI), also called Gross Potential Income (GPI) or Gross Scheduled Income (GSI), is the total revenue a property could generate if every rentable unit were fully occupied at market rents and all non-rent income streams were collected. PGI represents the theoretical maximum income before accounting for vacancies, credit losses, or expenses.

PGI formula

Use this basic formula to calculate PGI:

PGI = (Market Rent per Unit × Number of Units) + Other Income

“Other Income” can include parking fees, laundry and vending, storage, pet fees, and similar sources.

Why PGI matters

Investment screening: PGI gives investors a quick look at upside revenue potential when comparing properties.
Loan underwriting: Lenders use PGI as an initial indicator of a property’s income capacity during underwriting.
Valuation starting point: PGI is the first step when calculating metrics such as Effective Gross Income (EGI) and Net Operating Income (NOI).
Budgeting & forecasting: Property managers use PGI to create revenue budgets and test rent-up scenarios.

PGI examples

Example 1 — Apartment building (monthly)

20 units at $1,500/month each + $800/month laundry + $1,200/month parking:

Rental income: 20 × $1,500 = $30,000
Other income: $800 + $1,200 = $2,000
Monthly PGI = $32,000

Example 2 — Commercial building (monthly)

10 retail units at $5,000/month, 5 offices at $3,000/month, $2,000/month parking:

Retail: 10 × $5,000 = $50,000
Offices: 5 × $3,000 = $15,000
Other: $2,000
Monthly PGI = $67,000

Example 3 — Small office building (annual)

6 units: three at $700/month and three at $1,000/month:

Three × $700 × 12 = $25,200
Three × $1,000 × 12 = $36,000
Annual PGI = $61,200

How PGI relates to real-world income

PGI is theoretical. To estimate actual collectible income you subtract expected vacancy and credit loss from PGI to get EGI. Then subtract operating expenses from EGI to arrive at NOI, which reflects profitability before financing and taxes.

Key takeaways

PGI = the maximum possible income at full occupancy and market rents.
It does not account for vacancies, nonpayment, or operating costs—so real income is usually lower.
PGI is a starting metric used in investment analysis, underwriting, valuation, and budgeting.

Quick checklist to calculate PGI

Confirm market rent for each unit type.
Count all rentable units or spaces.
Add predictable ancillary income streams (parking, laundry, storage, fees).
Apply the formula and use PGI as the baseline for further adjustments (vacancy, expenses).

PGI is simple but powerful: it sets the ceiling for a property’s revenue potential and anchors deeper financial analysis used by investors, lenders, and managers.