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Ch 13: Income Approach in Real Estate

About This Chapter

Expand your knowledge of lease analysis, direct capitalization, compound interest tables in property valuation, and a whole lot more by reviewing this chapter. These lessons on the income approach in real estate can help you prepare for a class project or score high on a test.

Income Approach in Real Estate - Chapter Summary

The concise and fun lessons in this chapter provide an overview of the income approach in real estate, such as how to reconcile to the indicated value. You can review steps involved in lease analysis, as well as occupancy and vacancy analysis. There are also interesting lessons on how to estimate operating expenses and stabilized net operating income. After completing the chapter, you should be prepared to do the following with ease:

  • Recall formulas used in the income approach to property valuation
  • Explain why the income capitalization approach to appraisals is used
  • Discuss how income and expenses factor into real estate valuation
  • Provide an overview of how compound interest tables are used
  • Outline how income and expense statements are reconstructed
  • Recount methods used for direct and yield capitalization
  • Explain how the partial payment factor is used and what it produces
  • Detail how to estimate market value using the income approach

These lessons help you quickly grasp topics presented on the income approach in real estate, and our professional instructors facilitate an entertaining and information-packed learning experience. You can review all the lessons in order for a comprehensive refresher, or just study a few of the lessons to fill in knowledge gaps. Make the most of our online learning resource by taking a short quiz for each lesson to test your knowledge.

8 Lessons in Chapter 13: Income Approach in Real Estate
Test your knowledge with a 30-question chapter practice test
The Income Approach to Property Valuation

1. The Income Approach to Property Valuation

The income approach to property valuation is a useful tool for investors to evaluate income producing real estate. We will discuss the three major formulas that comprise the approach.

The Income Capitalization Approach for Appraisals

2. The Income Capitalization Approach for Appraisals

Every real estate investor needs to know the potential investment returns of a property before buying. The income capitalization approach to appraisals helps investors figure out a maximum purchase price for a particular rental property.

Effects of Income & Expenses on Real Estate Valuation

3. Effects of Income & Expenses on Real Estate Valuation

In this lesson we will review the common sources of income and expenses that factor into and determine the price that an investor should pay for a piece of real estate.

Lease Analysis: Definition & Process

4. Lease Analysis: Definition & Process

This lesson will explain what a lease analysis means and what it can and should accomplish. It will also explain the steps used in the income approach to property valuation.

Occupancy & Vacancy Analysis: Definition & Process

5. Occupancy & Vacancy Analysis: Definition & Process

In this lesson, we will learn about occupancy and vacancy rates and analysis. We will also learn what steps to take to perform an occupancy/vacancy analysis in property valuation.

Reconstructed Income & Expense Statement for Apartments

6. Reconstructed Income & Expense Statement for Apartments

Building financial models is just as important as brick and mortar. This lesson will discuss reconstructing income and expense statements for multi-family real estate.

Calculating Stabilized Net Operating Income in Real Estate

7. Calculating Stabilized Net Operating Income in Real Estate

This lesson will teach you how to develop an estimate of stabilized net operating income. You will learn what the required information is and the steps necessary to complete the process.

Estimating Real Estate Value Using the Income Approach

8. Estimating Real Estate Value Using the Income Approach

Sellers use market value to set their list price. Buyers use it to decide the amount they will offer for a property. Learn how to estimate market value using one of the three long-established approaches to valuation, the income approach.

Chapter Practice Exam
Test your knowledge of this chapter with a 30 question practice chapter exam.
Not Taken
Practice Final Exam
Test your knowledge of the entire course with a 50 question practice final exam.
Not Taken

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