Property Valuation
The income capitalization approach values property primarily by analyzing:
AThe cost to build the property today
BThe income the property produces in relation to market capitalization rates✓ Correct
CSales prices of comparable properties
DThe property's assessed value
Explanation
The income capitalization approach converts the property's net income stream into a value estimate by dividing NOI by the market capitalization rate.
Related Alabama Property Valuation Questions
- Capitalization rate (cap rate) is calculated as:
- Market value is best defined as:
- Which of the following would be considered a micro-level factor affecting property value?
- The principle of progression in real estate means that:
- When an appraiser says a property has 'economic life remaining' of 20 years, it means:
- Which type of depreciation is caused by factors outside the property, such as a nearby industrial facility?
- Net income ratio (NIR) is calculated as:
- The principle of 'contribution' in appraisal states that:
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