Property Valuation
In West Virginia, the income approach to value is MOST appropriate for:
ASingle-family residences
BVacant land
CIncome-producing properties like apartment buildings✓ Correct
DGovernment buildings
Explanation
The income approach is most appropriate for income-producing properties such as apartment buildings, office buildings, and commercial properties, where value is driven by the income the property generates.
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Key Terms to Know
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.
Net Operating Income (NOI)The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
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