A Florida appraiser is valuing a 40-unit apartment complex in Tampa that generates $360,000 in annual net operating income. Recent sales of similar properties indicate a capitalization rate of 7.5%. Using the income approach, what factors must the appraiser consider when applying this cap rate?
Correct Answer
A) Market conditions, property condition, location, and risk factors
When applying a cap rate in the income approach, appraisers must consider market conditions, property condition, location, and risk factors that affect the investment's desirability and risk profile. Option A focuses only on income calculations. Option C considers limited physical factors only. Option D focuses only on financing, which doesn't directly affect the cap rate selection.
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Previous Question
An appraiser in Miami is using the cost approach to value a 5-year-old commercial building. The replacement cost new is $850,000, the land value is $200,000, and the total depreciation is estimated at $75,000. What is the indicated value using the cost approach?
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When using the sales comparison approach in Florida, an appraiser would make adjustments for all of the following property characteristics EXCEPT: