Property Valuation
Which Iowa appraisal approach relies on the principle that an investor will pay only what the benefits of owning the property are worth?
ASales comparison approach
BCost approach
CIncome approach✓ Correct
DGross rent multiplier approach
Explanation
The income approach is based on the principle that value is the present worth of future benefits (income). An investor's price reflects the capitalized stream of income the property will generate.
Related Iowa Property Valuation Questions
- Iowa's Bureau of Labor Statistics and USDA data are useful in farmland appraisal for:
- The income capitalization approach divides NOI by the cap rate to find value. If a Des Moines apartment has an NOI of $85,000 and comparable properties sell at a 7% cap rate, what is the value?
- Functional obsolescence as a form of depreciation in real estate refers to:
- Which principle of value states that the value of a property is affected by the value of surrounding properties?
- An appraiser uses the income capitalization approach to value a 10-unit apartment building with a gross annual income of $120,000, vacancy and collection loss of 5%, and operating expenses of $50,000. The cap rate is 7%. What is the estimated value?
- In the cost approach, the estimated value of land is:
- An Iowa appraiser makes an adjustment of −$3,000 to a comparable sale that has a fireplace but the subject does not. This means the appraiser believes the fireplace:
- An Iowa income property has an NOI of $48,000 and is valued at $600,000. What is the capitalization rate?
Practice More Iowa Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Iowa Quiz →