Property Valuation
What is the 'income approach' to value and when is it most applicable?
AIt values a property by adding land value to depreciated replacement cost
BIt estimates value based on the present value of future income streams the property is expected to generate, most applicable to income-producing properties like apartments and commercial buildings✓ Correct
CIt values a property by comparing it to recent sales of similar properties
DIt applies only to raw land and undeveloped parcels
Explanation
The income approach converts expected future income into a present value estimate, typically using capitalization rates (cap rates) or discounted cash flow analysis. It is most applicable to investment properties: apartment buildings, office buildings, retail centers, and industrial properties. In Nevada's Las Vegas market, multifamily and commercial properties are routinely valued using cap rate analysis.
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