Self Help Documentation

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Income Approach

One of the three traditional approaches to value which measures the present worth of the future benefits of a property by the capitalization of the projected net income stream over its remaining economic life. The approach involves estimating the gross possible income; subtracting a reasonable vacancy and credit loss from the gross possible income to determine effective gross income; subtracting allowable operating expenses from effective gross income to determine net operating income; determining the proper capitalization method; computing the correct capitalization rate; and then capitalizing that projected net income into an indication of value.

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