The Income Approach is one of three major groups of methodologies, called valuation approaches, used by appraisers. It is particularly common in commercial real estate appraisal and in business appraisal. The fundamental math is similar to the methods used for financial valuation, securities analysis, or bond pricing. However, there are some significant and important modifications when used in real estate or business valuation.
While there are quite a few acceptable methods under the rubric of the income approach, most of these methods fall into three categories: direct capitalization, discounted cash flow, and gross income multiplier.
Read more about Income Approach: Direct Capitalization, Discounted Cash Flow, Gross Rent Multipler, Short-cut DCF
Famous quotes containing the words income and/or approach:
“The question for the country now is how to secure a more equal distribution of property among the people. There can be no republican institutions with vast masses of property permanently in a few hands, and large masses of voters without property.... Let no man get by inheritance, or by will, more than will produce at four per cent interest an income ... of fifteen thousand dollars] per year, or an estate of five hundred thousand dollars.”
—Rutherford Birchard Hayes (1822–1893)
“Oh! mystery of man, from what a depth
Proceed thy honours. I am lost, but see
In simple childhood something of the base
On which thy greatness stands; but this I feel,
That from thyself it comes, that thou must give,
Else never canst receive. The days gone by
Return upon me almost from the dawn
Of life: the hiding-places of man’s power
Open; I would approach them, but they close.”
—William Wordsworth (1770–1850)