Property Valuation
Under the income approach, a vacancy and collection loss allowance is deducted from potential gross income to account for:
AProperty management fees
BExpected periods when units will be vacant or tenants will not pay✓ Correct
CProperty tax increases
DDeferred maintenance
Explanation
Vacancy and collection loss is deducted from potential gross income to arrive at effective gross income. It accounts for expected periods of vacancy between tenants and for uncollected rents due to non-paying tenants.
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