Property ValuationIntermediateDelaware Exam

The income capitalization approach to value is most appropriate for:

ASingle-family owner-occupied homes

BVacant land with no improvements

CIncome-producing properties such as apartment buildingsCorrect

DGovernment-owned properties

Why Income-producing properties such as apartment buildings Is Correct

Answer C: Income-producing properties such as apartment buildings

The income capitalization approach is most applicable to income-producing properties (apartments, office buildings, retail centers) where the value is primarily driven by the property's ability to generate rental 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.