Value of a shopping center by the income approach

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Reference no: EM131598043

Suppose you are estimating the value of a shopping center by the income approach. You have determined that the gross rental income will be $225,000 each year and that the operating expenses will equal $35,000 each year. A similar center in the same area recently sold for $2,850,000. You talked with the selling broker and learned that the property was expected to have net income for the year of $175,000 after operating expenses of $27,500. Explain the logic behind the net income capitalization technique and use the technique to calculate the estimated value of the subject property (show the calculations).

Reference no: EM131598043

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