income approach



Method of arriving at the appraisal value of a property on the basis of its opportunity cost. It compares the net income the property would earn if rented out over its remaining useful life with the income that could be earned if the amount of its purchase price was invested in ventures of comparable risk. Also called income capitalization approach. See also cost approach and market approach.

Use income approach in a sentence

  • Our income approach was really interesting to me and I wanted to know more about what we could do with it.

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  • You should try to use a solid income approach when you are thinking of new ways to raise your total value.

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  • We used an income approach to valuate our rental properties. Based on what we could expect to bring in, we could place a value on it against the market.

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