Property ValuationIntermediateDelaware Exam
The income approach to value relies primarily on:
AReplacement cost minus depreciation
BThe property's ability to generate incomeCorrect
CComparable sales in the area
DThe assessed value for tax purposes
Why The property's ability to generate income Is Correct
Answer B: The property's ability to generate income
The income approach to value is based on the property's income-producing capacity. It is most applicable to commercial and investment properties and relies on net operating income and capitalization rates.
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
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