Property Valuation
The income approach uses a 'direct capitalization' method when:
AThe property has no income
BA single year's income (NOI) is capitalized into a value indication✓ Correct
CA multi-year discounted cash flow analysis is used
DThe property is being purchased with cash only
Explanation
Direct capitalization converts a single stabilized year's NOI into a value estimate using the cap rate (Value = NOI ÷ Cap Rate). It is the most common income approach for stabilized properties.
Related Georgia Property Valuation Questions
- The principle of anticipation in real estate valuation holds that:
- The gross rent multiplier (GRM) is calculated by dividing the:
- The income approach to value is LEAST appropriate for which property type?
- In a declining real estate market, an appraiser would likely apply:
- In the cost approach, the formula for estimating value is:
- A Georgia appraiser is valuing a neighborhood convenience store. Which approach to value is most likely to be primary?
- The 'gross rent multiplier' (GRM) is calculated as:
- The 'income approach' to value is MOST appropriate for:
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