The income approach to appraisal is most commonly used for which type of property?

Correct Answer

C) Rental and investment properties that generate income

The income approach estimates a property's value based on the income it generates. It is most appropriate for rental and investment properties such as apartment buildings, office buildings, and retail centers, where investors make purchasing decisions based on expected returns. The appraiser calculates net operating income and applies a capitalization rate to arrive at an estimated value. This approach is widely used for income-producing properties throughout Rhode Island.