Property Valuation
The income approach to valuation capitalizes a property's net operating income using the formula:
AValue = NOI × Cap Rate
BValue = NOI ÷ Cap Rate✓ Correct
CValue = Gross Rent ÷ GRM
DValue = NOI + Cap Rate
Explanation
The income approach formula is: Value = Net Operating Income ÷ Capitalization Rate. A higher cap rate results in a lower value; a lower cap rate results in a higher value.
Related Nebraska Property Valuation Questions
- A Nebraska property has a front porch that needs repair (cost = $2,000 to repair, adds $2,000 in value). The depreciation is:
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