Property Valuation
What is the 'income capitalization approach' to property value and what is the formula?
AValue = Income x Expenses
BValue = NOI / Cap Rate✓ Correct
CValue = Gross Income x GRM
DValue = Net Income + Debt Service
Explanation
The direct capitalization formula is: Value = Net Operating Income (NOI) / Capitalization Rate. This converts a property's NOI into an estimate of value based on the return rate investors require in that market.
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