Property Valuation
A Pennsylvania appraiser using the income capitalization approach for a small apartment building would compute annual potential gross income by:
AMultiplying the monthly rent by 10
BMultiplying the monthly rent per unit by 12 months by the number of units✓ Correct
CUsing last year's actual collected rents only
DApplying a state-mandated rental income multiplier
Explanation
Potential Gross Income (PGI) = Monthly Rent × 12 × Number of Units. For example, a 4-unit building with $1,000/unit/month = $1,000 × 12 × 4 = $48,000 annual PGI. The appraiser then deducts vacancy and credit loss to get Effective Gross Income, then operating expenses to get NOI.
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