Property Valuation
A Minnesota appraiser uses the income approach to value a small office building with a NOI of $42,000 and a cap rate of 7%. What is the estimated value?
A$540,000
B$600,000✓ Correct
C$480,000
D$660,000
Explanation
Value = NOI / Cap Rate = $42,000 / 0.07 = $600,000. The income capitalization approach is the preferred method for income-producing properties in Minnesota. The cap rate reflects the risk and return expectations of the local market.
Related Minnesota Property Valuation Questions
- A Minnesota appraiser is conducting an appraisal for a property in a declining market. The appraiser should:
- Functional obsolescence in Minnesota real estate refers to:
- The principle of anticipation in Minnesota real estate valuation states that:
- In a Minnesota comparative market analysis, an appraiser finds a comparable home sold for $310,000 but it has an extra bathroom worth $8,000 compared to the subject property. What adjusted value is used?
- In Minnesota, the 'income approach' for a small residential rental property (1-4 units) typically uses the:
- In a declining market, a Minnesota appraiser using the sales comparison approach should:
- In Minnesota, a property that has been zoned for commercial use but is currently being used as a residence represents what type of value situation?
- Which type of depreciation in a Minnesota appraisal is caused by factors outside the property, such as a nearby industrial facility?
Practice More Minnesota Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Minnesota Quiz →