Property Valuation
When an appraiser applies the 'income approach' to a residential rental property, the final step is to:
ASubtract depreciation from the replacement cost
BDivide the NOI by the appropriate capitalization rate to obtain the property value✓ Correct
CAverage the GRM and the cap rate
DAdd the land value to the building income
Explanation
In the income approach, once NOI is determined, the appraiser divides it by the market capitalization rate (Value = NOI ÷ Cap Rate) to produce the income approach value indication.
Related Florida Property Valuation Questions
- Regression and progression are appraisal principles related to:
- In a Florida appraisal, 'accrued depreciation' is defined as:
- A Florida income property has an NOI of $72,000 and a capitalization rate of 8%. What is the estimated value using the income approach?
- What is 'effective age' of a property in appraisal terminology?
- Which of the following best defines 'market value' in a Florida appraisal context?
- The income approach to value is most commonly used for which type of Florida property?
- The 'income approach' to property valuation is most commonly used for:
- A Florida office building generates a Net Operating Income (NOI) of $120,000 per year. Using a capitalization rate of 8%, what is the indicated value?
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