Property Valuation
In the income approach, 'effective gross income' is calculated as:
APotential gross income minus operating expenses
BPotential gross income minus vacancy and credit losses✓ Correct
CNet operating income minus debt service
DGross rent minus property taxes
Explanation
Effective Gross Income = Potential Gross Income (100% occupancy rent) minus Vacancy and Credit Losses. It represents the realistic income estimate before operating expenses.
Related New Mexico Property Valuation Questions
- In New Mexico, which principle states that the maximum value of a property is determined by what a buyer could pay for a similar substitute property?
- In New Mexico, a 'cash equivalency' adjustment in appraising a comparable sale accounts for:
- In New Mexico, an appraiser using the income approach must estimate 'vacancy and credit loss' because:
- A New Mexico appraiser is asked to determine the 'as-completed' value of a property currently under renovation. This is:
- In New Mexico, which of the following properties would most likely be appraised using the income approach as the primary method?
- In New Mexico, when comparable sales show significant variation in selling prices, an appraiser should:
- In New Mexico, an 'appraisal review' is performed by an appraiser to:
- In New Mexico, the 'cost to cure' approach to estimating depreciation applies when:
Practice More New Mexico Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free New Mexico Quiz →