Property Valuation
Iowa farmland capitalization rates (cap rates) used in the income approach for farm valuation are typically:
AHigher than those used for urban commercial property
BLower than those used for urban commercial property, reflecting farmland's investment characteristics and stability✓ Correct
CSet by the IREC annually
DIdentical to residential mortgage interest rates
Explanation
Iowa farmland typically trades at relatively low capitalization rates compared to commercial real estate, reflecting strong investor demand, the stability of agricultural income, and land appreciation expectations. Lower cap rates indicate higher values relative to income.
Related Iowa Property Valuation Questions
- An Iowa income property has an NOI of $48,000 and is valued at $600,000. What is the capitalization rate?
- Which Iowa appraisal approach relies on the principle that an investor will pay only what the benefits of owning the property are worth?
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- An Iowa appraiser is preparing a desktop appraisal using available data without a physical inspection. What limitation applies?
- An Iowa appraiser would use the cost approach as the primary valuation method for:
- Iowa's county assessor reassesses all properties at least every:
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