Income approach method

Income Approach Method

SONIA DURAN CORONADO Group

October 07, 2022

Topic Definition

The income approach is a type of real estateappraisal method that allows investors to estimate thevalue of a property based on the income the propertygenerates. It’s used by taking the net operatingincome (NOI) of the rent collected and dividing it bythe capitalization rate. It’s also known as the incomecapitalization approach.

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Processes Related

Direct capitalization method Consists of identifying the annual net operatingincome and dividing it by the capitalization raterelated to the property. The annual net operatingincome amount includes consideration formaintenance costs, property improvements,depreciation, insurance, and any other factors thatreduce the profits associated with owning and usingthe property in an income-generating business. If theresulting figure does not indicate that the propertywill generate income above what is needed to runthe business, investors are likely to look elsewhere foropportunities

Gross income multiplier

It takes into account the income generated byrentals and leases of real estate compared to thesale price of the property. Depending on theinvestor's objectives, it may be more useful todetermine the ratio of annual rent to sales price,or to calculate the ratio of sales price to monthlyrental or lease amount. When the idea is to buyrental homes or apartment buildings as a long-term investment, this method provides a quicksnapshot of the basic income that can beexpected from the property. Often this method isused in conjunction with one of the other twomethods to determine if the investment is reallyworth the investor's time and money.

Answer to the question

CONCIENCIA

How can companies create value from their innovation

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clientes

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Technological innovation is a source of income,digital transformation is a point in the economicincome of a company, in the competitiveness of themarket, it is also a necessary tool so as not to beforgotten commercially. The impact thattechnological globalization generates in thedevelopment of companies is evident. Currently, ifmanagers want a source of income with greatbenefits, they should see the option of investing ininnovation. Many of the pioneering companies haveinvested without limits, since digital innovation has nolimits. In addition, another point as a source ofincome is to treat data as an asset, many of the dataare studies that seek to meet the needs of the currentmarket and that is where innovation is a source ofincome.

Bibliography

World Intellectual Property Organization (WIPO) & International Trade Centre (ITC), (2010). Exchanging Value – Negotiating Technology Licenses, A Training Manual (pp 32-41).

Redacción. (21 de Octubre de 2019). Logo ComputerWorld.Obtenido dehttps://www.computerworld.es/tecnologia/innovar-tecnologicamente-es-una-fuente-de-ingresos

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