What does the Income approach primarily assess?

The Income approach primarily evaluates the value of income-producing properties by estimating the present value of expected future cash flows generated by the property. This method is particularly relevant for commercial real estate, such as apartment buildings, office complexes, and retail spaces, where the income generated from tenants is a crucial factor in determining the property's worth.

By focusing on the anticipated income, this approach allows investors and appraisers to calculate a property's value based on its potential to generate revenue. Factors like rental income, operating expenses, and capitalization rates are taken into account to arrive at a valuation that reflects the property's ability to produce income over time.

This makes the Income approach a fundamental tool for anyone involved in evaluating investment properties or making informed decisions in real estate markets focused on generating revenue.