Property Valuation
Which appraisal approach is most appropriate for a special-use property like a Nebraska grain elevator?
ASales comparison approach
BIncome approach
CCost approach✓ Correct
DGross rent multiplier
Explanation
The cost approach is most appropriate for special-use or single-purpose properties like grain elevators because there are few comparable sales and they typically aren't income-producing in the traditional sense.
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Key Terms to Know
Appraisal
A professional estimate of a property's market value prepared by a licensed or certified appraiser.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
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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