What does potential rental income represent for a property?

Potential rental income represents the maximum income a property could generate if it were rented out at current market rates and maintained at full occupancy. This figure is critical for property investors because it provides a benchmark for expected revenue without considering factors like vacancies or costs associated with renting.

When evaluating a property, potential rental income is calculated based on the assumption that there are no units vacant and that all tenants pay the full market rent. This helps investors assess the investment's viability and set appropriate financial goals.

Other potential choices may reflect varying aspects of income calculation, such as actual received income or historical earnings. However, they do not establish the ideal income scenario that potential rental income seeks to identify. Understanding this concept is essential for anyone involved in real estate investment or property management.