What is the income approach in real estate appraisal?

The income approach, sometimes referred to as the income capitalization approach, is a type of real estate appraisal method that allows investors to estimate the value of a property based on the income the property generates. It’s used by taking the net operating income (NOI) of the rent collected and dividing it by the capitalization rate .

What is income approach?

Income Approach is a valuation method used by real estate appraisers to estimate the fair market value of a property based on its income.

What is the income approach in real estate valuation?

The income approach, under the specific context of real estate valuation, is a method used by appraisers to determine a property’s market value based on its income. The income approach, or “capitalization approach”, states that the value of an investment property is a function of the quality and quantity of the income it is expected to generate.