Property Valuation
In New York, the 'overall capitalization rate' (OAR) used in the income approach reflects:
AThe property's annual tax rate
BThe relationship between a property's annual NOI and its market value, derived from comparable investment sales✓ Correct
CThe mortgage interest rate
DThe percentage of the purchase price financed
Explanation
The overall capitalization rate (OAR or 'cap rate') is derived from the market—dividing comparable investment properties' NOI by their sale prices to establish the expected return rate. It is then applied to the subject's NOI to estimate value.
Related New York Property Valuation Questions
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