The Income Capitalization Approach
4.20
14 Reviews
Participants review three market value approaches for income properties, focusing on income capitalization, and assess the importance of using actual cash flow for debt capacity.
Options | |
| Self-Study | Add to Cart |
Certificate
0.5 Credit
Cost
1 hr.
Duration
n/a
Prep Time
1
Quiz
Overview
In this short self-study course, participants review the three approaches for estimating market value of an income producing property with special emphasis on the income capitalization approach. They assess the importance of properly identifying existing net operating income and using actual property cash flow, rather than an estimate of property market value, in establishing the amount of interest-bearing debt that a property's cash flow can support in both good and bad times.
Who Should Take This Course
Analysts and lenders interested in exploring the frequent differences between actual property cash flow and "stabilized" or "what if" cash flow provided in an appraisal report as well as assessing the resulting implications for the amount of interest-bearing debt that a property's cash flow can actually support.
Prerequisites
General familiarity with an operating statement for an income producing property.
Objectives
By the end of the course, participants will be able to:
- Explain the use of estimates and the critical role of the appraiser's judgment in establishing market value using any of the standard valuation approaches.
- Determine the amount of interest-bearing debt an income producing property can support from existing, rather than stabilized, net operating income using the income capitalization approach to estimating market value.
- Explain the basic conflict between the primary focus of an appraisal report and the primary focus of the lender in using appraisal report information to reach a credit decision.
Materials(access provided with registration)
- Credit Refresher on The Income Capitalization Approach
- Online Quick Hit Review Quiz
- Webinar Poll Solutions
- Exercise Solutions
