Property Valuation
In Oregon, which type of property is MOST likely to be appraised using the income approach as the primary method?
AA single-family residence in Tigard
BA 50-unit apartment complex in Portland✓ Correct
CA vacant lot in Medford
DA new construction home in Lake Oswego
Explanation
The income approach is the primary appraisal method for income-producing properties. A 50-unit apartment complex generates rental income, making the income approach (capitalizing NOI) the most reliable method.
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Key Terms to Know
Net Operating Income (NOI)
The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
Capitalization Rate (Cap Rate)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.
Math Concepts
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