Income Approach

You inherit a house from your Great Uncle Wally. You want to get its value appraised. The income approach represents one method to calculate that figure.

The income approach bases a property’s value on its potential for generating rental income. To make the calculation, you determine the market value for monthly rent for similar real estate in the area. Then, using that figure, you extrapolate an overall value.

The method represents one of three main ways to determine the value of properties. The other two are the Sales Comparison Approach and the Cost Approach.