Property Valuation
In New Mexico, an appraiser using the income approach must estimate 'vacancy and credit loss' because:
AAll properties always achieve 100% occupancy
BReal properties typically experience some periods of vacancy and some rent collection losses, reducing actual income below theoretical maximum✓ Correct
CLenders require a specific vacancy assumption
DUSPAP mandates a 10% vacancy deduction for all properties
Explanation
Vacancy and credit loss deducts the expected income lost from vacant units and uncollectible rents from Potential Gross Income to arrive at Effective Gross Income (EGI). Market vacancy rates for similar properties in the area guide this estimate.
Related New Mexico Property Valuation Questions
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