Property Valuation
An Alabama appraiser uses the income approach to value a rental property. The key formula is:
AValue = Cost − Depreciation
BValue = NOI ÷ Cap Rate✓ Correct
CValue = Sales Price × GRM
DValue = Replacement Cost + Land Value
Explanation
The income approach to value uses: Value = Net Operating Income (NOI) ÷ Capitalization Rate. This converts the property's income stream into an estimate of market value.
Related Alabama Property Valuation Questions
- Effective age of a building differs from actual (chronological) age because effective age:
- A straight-line method of depreciation for appraisal purposes assumes that:
- The income approach to value is most commonly used to appraise:
- The principle of 'conformity' states that:
- The gross rent multiplier (GRM) in Alabama is calculated as:
- When using the income approach, which type of property income is used for the capitalization calculation?
- When appraising a property using the income approach, stabilized NOI is used rather than actual current NOI because:
- What is the indicated value of a property with an annual NOI of $36,000 and a capitalization rate of 7.5%?
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