Property Valuation
A Florida property appraiser uses the 'direct capitalization' method to value an income property. This method:
ADiscounts future income streams to present value over multiple years
BDivides the property's single-year NOI by a market-derived capitalization rate✓ Correct
CAverages income from the past 5 years
DMultiplies the gross rent by a predetermined factor
Explanation
Direct capitalization converts a single-year NOI into an estimate of value by dividing the NOI by a market-derived capitalization rate (Value = NOI ÷ Cap Rate). It is the most commonly used income approach method for stabilized income properties.
Related Florida Property Valuation Questions
- A Florida appraiser performing a 'retrospective' valuation for a divorce settlement in 2020 for a property that was purchased in 2018 would use:
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- Under USPAP (Uniform Standards of Professional Appraisal Practice), which of the following would be a violation?
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