True or False: A management company that maintains low rent levels and low vacancies will likely increase their Effective Gross Income.

The statement is true because a management company that maintains low rent levels and low vacancies can effectively increase their Effective Gross Income (EGI). EGI is calculated by taking the gross rental income, adjusting it for vacancy losses, and adding other income sources.

Maintaining low vacancies indicates that the property is being rented consistently, which contributes to stable and potentially increased income. Even though lower rents may seem counterintuitive at first, consistent occupancy can lead to a more stable revenue stream and reduce the costs associated with turnover, such as cleaning, marketing, and lost rent during vacancy periods. Therefore, if the management company successfully manages to keep occupancy rates high, this stability can lead to a more favorable EGI, as the income from occupied units can potentially offset the impact of lower rent levels.

In summary, the strategy of keeping vacancies low, while possibly accepting lower rental prices, can be a strategic move to ensure consistent cash flow and increase the overall Effective Gross Income for the property.