Understanding the Income Approach in Real Estate Valuation

Very Easy Real Estate Investment Valuation Methods

John is considering investing in a commercial property. He wants to understand how to evaluate the worth of the property. One of the valuation methods that he comes across is the Income Approach.

Which of the following statements best describes the Income Approach to real estate valuation?

It primarily evaluates the property based on the recent sales of comparable properties.

It estimates the value of the property based on its potential to generate income.

It focuses on the replacement cost of the property to determine its market value.

Hint

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