income approach

Definition

The process of estimating the value of an income-producing property through capitalization of the annual net income expected to be produced by the property during its remaining useful life.

Use income approach in a sentence

Our income approach was a lot different than everyone else's because we did not play it safe and took more chances.

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The Shopping plaza owners had to use an income approach to determine the worth and value of one of their older, less productive properties.

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If a person knows how much longer his house will remain structurally sound and the potential income it will generate during that period, he will be able to use the income approach to calculate future earnings.

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income accounts residual process