An income-producing property generates $48,000 in annual net operating income. If the capitalization rate for similar properties in the area is 8%, what is the estimated property value using the income approach?
Correct Answer
C) $600,000
Using the income approach formula: Property Value = Net Operating Income ÷ Capitalization Rate. $48,000 ÷ 0.08 = $600,000. This method is particularly useful for investment properties where income generation is the primary value driver.
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An income-producing property generates $120,000 in annual rental income and has operating expenses of $45,000. If investors in this market expect a 7% capitalization rate, what is the indicated value using the income approach?
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An income-producing property has a gross rental income of $120,000, vacancy rate of 5%, operating expenses of $35,000, and debt service of $25,000. What is the Net Operating Income (NOI) for valuation purposes?