Property Valuation
In the income approach, 'capitalization' means:
AAdding up all rental income for the year
BConverting net operating income into an indication of value by dividing by the capitalization rate✓ Correct
CSubtracting expenses from gross income
DMultiplying the GRM by the monthly rent
Explanation
Capitalization is the process of converting an income stream (NOI) into a value estimate by dividing by the capitalization rate: Value = NOI ÷ Cap Rate.
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