An appraiser in New York City is valuing a mixed-use building with ground-floor retail and residential apartments above. The retail space is subject to a long-term lease at below-market rent. Which approach would be most appropriate for this property?
Correct Answer
B) Income approach with careful analysis of the lease terms
The income approach is most appropriate for this mixed-use property because it can properly account for the below-market lease terms and the different income streams from retail and residential uses. This approach allows for detailed analysis of lease terms, rent escalations, and the impact of below-market rents on value.
Why This Is the Correct Answer
Why the Other Options Are Wrong
Deep Analysis of This Valuation Question
Background Knowledge for Valuation
Real World Application in Valuation
Related Topics & Key Terms
Key Terms:
More Valuation Questions
Example of economic obsolescence in real estate?
Who typically hires the appraiser in a real estate transaction?
Which appraisal report type do California lenders commonly rely on for single-family residence financing?
Return of an investor’s investment is provided for through:
All of the following are one of the four important elements of value, except:
- → Under the replacement cost approach of appraisal, an appraiser is least interested in:
- → The appraisal process which allocates a percentage of a property’s total value to the land and a percentage to the improvements is known as:
- → A property's value decreased because a noisy highway was built nearby. This is an example of:
- → Which of the following is the least important factor used to determine the market value of a property?
- → In Texas, a comparative market analysis (CMA) can be prepared by:
- → All of the following have a specific dollar value, except:
- → In which appraisal approach to value would the value for the land be calculated separately?
- → In Texas, functional obsolescence includes:
- → A capitalization rate of 8% on a property with $40,000 NOI indicates a value of:
- → An appraiser views the addition of an amenity to an apartment building under which appraisal principle?
People Also Study
Buyer Representation Agreement
8% of exam
Property Ownership
10% of exam
Land Use Controls and Regulations
8% of exam
Financing
12% of exam
Previous Question
When appraising properties in New York State, all of the following situations would typically support using the cost approach EXCEPT:
Next Question
A New York appraiser is valuing a condominium unit in a building where the sponsor still owns unsold units. How should this factor be considered in the valuation approaches?