The income approach to value is most appropriate for:
Why Income-producing properties like apartment buildings Is Correct
Answer C: Income-producing properties like apartment buildings
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.
Key Property Valuation Terms in This Question
People Also Study
Related California Questions
- A commercial property has an annual NOI of $105,600 and comparable properties are selling at a 7% cap rate. What is the property's value using the income approach?Real Estate Math
- A property generates an NOI of $60,000. Comparable properties sell at a 5% cap rate. What is the indicated value using the income approach?Property Valuation
- The income approach to value is most commonly used for:Property Valuation
- The income approach to value is most appropriate for which type of property?Property Valuation
- A property generates annual rental income of $96,000. An appraiser uses a gross rent multiplier (GRM) of 13 to estimate value. What is the indicated value?Property Valuation
- A property generates annual gross rent of $96,000. If comparable properties sell at a GRM of 12 (annual), what is the estimated property value?Real Estate Math
- An income property has an NOI of $84,000. Comparable properties are selling at a 7% cap rate. What is the estimated value?Real Estate Math
- Polychlorinated biphenyls (PCBs) are a concern in older commercial properties primarily because they were used in:Environmental
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.
Net Operating Income (NOI)The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
Study This Topic
Practice More California Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free California Quiz →