Property Valuation
Which of the following factors would MOST increase the capitalization rate for an Ohio investment property?
ALow vacancy rates in the market
BHigher perceived risk due to the property's age, condition, or location✓ Correct
CStrong demand for the property type
DNew long-term leases with creditworthy tenants
Explanation
Cap rates increase (and values decrease) when perceived risk is higher. Older, poorly maintained properties in less desirable locations command higher cap rates to compensate investors for the additional risk.
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