Property Valuation
In West Virginia, the 'band of investment' technique is used in the income approach to determine:
AThe appropriate gross rent multiplier
BThe overall capitalization rate based on mortgage and equity components✓ Correct
CThe effective gross income from a rental property
DThe vacancy and credit loss rate for a market
Explanation
The band of investment technique calculates the overall cap rate as a weighted average of the mortgage constant (lender's required return on their investment) and the equity dividend rate (investor's required return on equity), weighted by their respective percentages of value.
Related West Virginia Property Valuation Questions
- A West Virginia appraiser who finds very few comparable sales must consider using:
- The capitalization rate (cap rate) formula used to value income property in West Virginia is:
- Physical deterioration of a West Virginia building can be classified as either:
- In West Virginia appraisal practice, 'paired sales analysis' is used to:
- A West Virginia appraiser is asked to estimate the value of a 100-year-old historic building in downtown Charleston. Which approach to value would be least appropriate?
- In the cost approach to value, the appraiser estimates the value of land separately because:
- An appraiser in Morgantown, WV uses the sales comparison approach and finds a comparable that sold for $220,000 but has a two-car garage worth $8,000 while the subject has no garage. The appraiser should:
- In West Virginia, a property value that is 'bracketed' in the sales comparison approach means:
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