Property Valuation
Iowa's assessed value for multi-family residential property (5+ units) is typically determined by:
AOnly the cost approach
BThe income approach as the primary method, reflecting the income-producing nature of the investment✓ Correct
COnly comparing recent sales of similar complexes
DUsing the residential rollback formula identical to single-family homes
Explanation
For multi-family investment properties, Iowa county assessors typically emphasize the income approach (capitalizing net operating income) as the primary valuation method, since investors primarily purchase these properties based on their income-generating capacity.
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Key Terms to Know
Capitalization Rate (Cap Rate)
A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Net Operating Income (NOI)The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
Math Concepts
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