Property Valuation
When appraising a Wyoming income-producing property, the capitalization rate (cap rate) is calculated as:
ANet Operating Income divided by Sale Price✓ Correct
BGross Rent divided by Sale Price
CNet Operating Income multiplied by Sale Price
DGross Rent multiplied by Cap Rate
Explanation
Cap Rate = Net Operating Income (NOI) divided by Value (Sale Price). This formula is used in the income approach to value. A higher cap rate typically indicates higher risk or a lower-value market; a lower cap rate indicates lower risk or a premium market such as Jackson Hole.
Related Wyoming Property Valuation Questions
- A Wyoming appraisal uses a 'cost-to-cure' approach for depreciation. This method is used when:
- In Wyoming, 'effective age' of a property differs from 'actual age' because:
- A Wyoming appraiser values ranch land by using comparable land sales. The subject property is 500 acres. Which approach is most appropriate?
- Effective age differs from actual age because:
- In Wyoming, the sales comparison approach relies on:
- The principle of 'substitution' underlies which appraisal approach?
- A Wyoming Comparative Market Analysis (CMA) prepared by a real estate agent differs from a formal appraisal because:
- A Wyoming commercial property's effective gross income (EGI) is calculated as:
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