Property Valuation
In Louisiana appraisal practice, which best describes the 'income capitalization approach' for a small rental house?
AEstimating value based on replacement cost minus depreciation
BEstimating value by converting anticipated income into a present value using a capitalization rate✓ Correct
CComparing the property to recent sales of similar rentals
DMultiplying the assessed value by the state income factor
Explanation
The income capitalization approach estimates value by dividing the property's net operating income by an appropriate capitalization rate — reflecting the income-producing capacity of the property.
Related Louisiana Property Valuation Questions
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