Property Valuation
What is the 'income capitalization' approach to valuing a Delaware investment property?
ADividing the property's sale price by its annual income to determine the GRM
BDividing the net operating income by the capitalization rate to determine value✓ Correct
CAdding the land value to the capitalized value of the improvements
DCapitalizing the property's equity to determine return on investment
Explanation
The income capitalization approach estimates value by dividing the property's Net Operating Income (NOI) by an appropriate capitalization rate: Value = NOI ÷ Cap Rate. It converts an income stream into a value estimate.
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