The 'income capitalization approach' is MOST applicable in appraising which type of NC property?
Why An apartment complex or commercial property Is Correct
Answer C: An apartment complex or commercial property
Exam Tip: Property Valuation
Valuation questions focus on the three approaches to value: sales comparison, cost, and income. Know which approach is best for which property type. The income approach uses cap rate and NOI — memorize these formulas.
People Also Study
Related North Carolina Questions
- The income approach to value is most appropriate for which type of NC property?Property Valuation
- A property in Raleigh, NC has a net operating income of $48,000 and the market capitalization rate is 8%. Its estimated value using the income approach is:Property Valuation
- The Americans with Disabilities Act (ADA) primarily applies to which type of properties?Fair Housing
- In the income approach, the 'overall capitalization rate' (OAR) differs from a 'mortgage capitalization rate' in that the OAR:Property Valuation
- An appraiser is using the income approach to value a small apartment building. The property generates $96,000 annual gross income and has a 10% vacancy rate, operating expenses of $30,000, and a cap rate of 8%. What is the indicated value?Property Valuation
Key Terms to Know
A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Net Operating Income (NOI)The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
Study This Topic
Practice More North Carolina Real Estate Questions
1,400+ questions covering all exam topics. Start free — no signup required.
Take the Free North Carolina Quiz →