About This Chapter
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.
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.
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.
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.
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.
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.
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.
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.
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.
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Other chapters within the Ohio General Appraiser Exam: Study Guide & Practice course
- Real Property & Property Ownership
- Real Estate Value
- Government Powers in Real Estate
- Surveying Property in Real Estate
- Building Components & Structures
- Liens & Encumbrances in Real Estate
- Rights to Use in Real Estate
- Land & Site Valuation
- Statistics, Valuation Models & Finance for Real Estate
- Common Real Estate Calculations
- Sales Comparison Approach in Real Estate
- Cost Approach in Real Estate
- Reconciliation in Real Estate Appraisal
- USPAP Compliance
- Real Estate Appraisal Report Writing