In Alaska, which of the following properties would MOST likely receive the HIGHEST capitalization rate from an appraiser?
Why A small retail strip in a rural Alaska community with high vacancy and uncertain income Is Correct
Answer B: A small retail strip in a rural Alaska community with high vacancy and uncertain income
Exam Tip: Property Valuation
Valuation questions focus on the three approaches to value: sales comparison, cost, and income. Know which approach is best for which property type. The income approach uses cap rate and NOI — memorize these formulas.
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Key Terms to Know
A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
1031 ExchangeA tax-deferred exchange allowing investors to sell one investment property and reinvest proceeds in a like-kind property while deferring capital gains taxes.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
Math Concepts
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