The potential gross income is important because it serves as the ___________ for financial analysis.

The potential gross income serves as the baseline for financial analysis because it represents the total income a property could generate if it were fully leased at market rates, without any deductions for vacancies, credit losses, or operating expenses. This figure is essential for appraisers and investors as it sets the stage for evaluating the property’s financial performance, allowing for comparisons against actual income and projections of net operating income. By using this baseline, financial analyses can be built upon it to assess profitability, investment viability, and potential return on investment, making it a critical starting point in the financial evaluation of real estate assets.