FRECI_15-4 - Lecture Preview Florida Real Estate Commission...

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1 Florida Real Estate Commission Course I Pre-Licensing Course for Sales Associates Session 15 – Lecture 4 Real Estate Appraisal Copyright, 2005 2 Lecture Preview What will you learn from this lecture? Discuss the “income-capitalization approach” to property valuation Identify the types of properties best suited to this approach Identify three types of operating expenses Calculate net operating income Copyright, 2005 3 Vocabulary Terms Income capitalization approach Copyright, 2005 4 Three Approaches to Value 1. Sales comparison approach 2. Cost-depreciation approach 3. Income approach Copyright, 2005 5 3. Income Approach Calculate the present value of expected future income (capitalize the NOI) Subjective (per investor’s criteria) Requires income and expense information Principle of substitution Value is based on property income and investor’s required rate of return (Income Capitalization) Copyright, 2005 6 The “IRV” Triangle ÷ x = Rate Income Value Value = Income Rate Value Income Rate = x
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This note was uploaded on 05/21/2011 for the course FREC 1000 taught by Professor Stallone during the Spring '08 term at University of Florida.

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FRECI_15-4 - Lecture Preview Florida Real Estate Commission...

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