an estimated value based on the capitalization of income and productivity; the income approach to value; the economic approach to value; an approach concerned with the present worth of future benefits of the property. definition of income approach defined income approach to value defined definition of economic approach to value defined appraiser's cost approach
One of the 3 major approaches to value estimation. It is based on the idea that a propertyâ€(tm)s ability to generate net income creates value. That is, a future net income stream commands a price in the market place for which there are buyers and sellers. This relationship can be expressed as follows: V = I/R where: V = value of the property or investment I = net income generated over a given time period R = rate of return, aka capitalization rate So, in order to estimate value by way of the Income Approach, two components need to be established: annual net income and rate of return. Of course, since it is a simple equation, as long as any two components are known, the third can be calculated.
One of the three methods of the appraisal process generally applied to income producing property, and involves a three-step process. (1) find net annual income, (2) set an appropriate capitalization rate or “present worth” factor, and (3) capitalize the income dividing the net income by the capitalization rate.
The method of estimating the value of a property based on income capitalization. Income figures should reflect current market conditions and typical management. 2) A set of procedures through which an appraiser derives a value indication for an income-producing property by converting its anticipated benefits into property value. This conversion can be accomplished in two ways. One year's income expectancy can be capitalized at a market-derived capitalization rate or at a capitalization rate that reflects a specified income pattern, return on investment, and change in the value of the investment. Alternatively, the annual cash flows for the holding period and the reversion can be discounted at a specified yield rate.
One of three primary methods for estimating Market Value -- the procedural analysis of estimating the value of real property by transforming a current flow of income into an indication of value. The three critical components of the income approach include the potential gross annual income, the annual expenses and the capitalization rate derived from competing sales. The income approach can be applied via the internal rate of return, gross capitalization, cash-on-cash return, overall rate of return, direct capitalization and recapture rate, building capitalization and band of investment theory.
General way of determining the value of a business, business ownership interest, security or intangible asset using one or more methods that calculate the present value of anticipated future income.
An appraisal procedure in which the projected income of a property is mathematically converted to a value. The value of income-producing property can be determined by converting its projected net earnings into value through process known as capitalization.
A method of measuring the value of a property based on the market rent or income that the property can be expected to earn.
One of the three primary methods of real estate valuation used by Appraisers (Cost, Income, Market Data). Based on the anticipated future income of the property. The formula is (Expected Annual Net Income divided by the Capitalization Rate) = Value.
That procedure in appraisal analysis which converts anticipated benefits (dollar income or amenities) to be derived from the ownership of property into a value estimate. The income approach is widely applied in appraising income-producing properties. Anticipated future income and /or reversions are discounted to a present worth figure through a capitalization process.
The process of estimating the value of an income-producing property by capitalization of the annual net income expected to be produced by the property during its remaining useful life.
A general way of determining the value indication of a business, interest, security or intangible asset that uses one or more methods that convert anticipated economic benefits into a present single amount.
a set of procedures that generates a value indication for an income producing parcel(multi-family residential, commercial or industrial) by converting anticipated benefits through ownership of property. Direct capitalization converts a single year of income into value whereas yield capitalization converts several or many future year's income into value.
A method used by an appraiser to estimate the value of a property by calculating it's generated income.
An appraisal technique whereby the potential of the property to produce income is used to assess its value.
the process of estimating the fair market value of a commercial property by capitalizing its annual net income.
A method of appraising property based on the properties anticipated future income. Once net income is established, it is then divided by the estimated capitalization rate to arrive at a fair market value.
The process of estimating the value of property by considering the present value of a stream of income generated by the property.
A step in the valuation process of an income property. The value is reached by estimating the annual income minus an allowance for vacancies and bad debts and then subtracting annual operating expenses, real estate taxes, and insurance premiums to obtain the net operating income. This is then converted by capitalization into a capital value.
Estimating the value of an income-producing property by capitalizing its net annual income.
a method appraising real estate based on the property’s anticipated future income.
A technique used in appraising property determines fair market value by capitalizing net income.
A set of procedures through which an appraiser derives a value indication for an income-producing property by converting its anticipated benefits into property value. This conversion can be accomplished in two ways. One year's income expectancy can be capitalized at the market-derived capitalization rate or at a capitalization rate that reflects a specified income pattern, return on investment, and change in the value of the investment. Alternatively, the annual cash flows for the holding period and the reversion can be discounted at a specified yield rate. Incurable Depreciation: An element of accrued depreciation; a defect caused by a deficiency or super-adequacy in the structure, materials, or design, which cannot be practically or economically corrected.
An approach to value applied by considering the income producing capabilities of a property. Methods vary greatly among tax jurisdictions. While most jurisdictions do not apply this approach initially, many will consider some type of income analysis upon assessment protest.
An appraisal technique which estimates the value of a piece of property by the capitalization of the net income of the property.
A method used by an appraiser to estimate the value of a property based on the income it generates.
a general way of determining a value indication of a business, business ownership interest, security, or intangible asset using one or more methods that convert anticipated benefits into a present single amount.
Method of appraisal for real estate based on the property's anticipated future income; market value equals expected annual income divided by the capitalization rate.
A method of establishing market value by using rental income as a factor for calculating value.
An approach to the valuation or appraisal of real property as determined by the amount of net income the property will produce over its remaining economic life.
The method of estimating the value of a property by calculating its generated income
With regard to appraisal; it is the method in which the estimated gross income of a property is used as the basis for estimating value along with a gross rent multiplier.
A method of appraising a property that is based on the property's anticipated future income. The net income is established and then divided by the estimated capitalization rate to arrive at a fair market value.