Income Approach

Property valuation method where the current market value of a property is calculated by discounting (multiplication by the inverse of the capitalisation rate) the current market net income in perpetuity. The method requires three essential factors, namely the market rental value, capitalisation rate and (bottom line) capital adjustments. The capitalisation of net income approach is usually the principal valuation method for commercial or investment properties including retail and industrial.

See also: Capitalisation Approach, Capitalisation of Market Rental Approach,  Capitalisation of Net Income Approach, Capitalisation of Net Rental Approach, Investment Approach.