In which appraisal approach is an opinion of NOI derived?

The income approach to appraisal is focused on the income-generating potential of a property, and in this context, it specifically derives the opinion of net operating income (NOI). The income approach calculates the present value of future income streams that an investment property is expected to produce, which directly ties into evaluating NOI.

Net operating income is a key metric that represents the total income from a property after deducting all operating expenses, but before considering financing costs and taxes. Appraisers use this approach primarily for income-producing properties, such as apartment complexes, office buildings, or retail spaces, where the rental income and expenses are crucial for assessing value.

By utilizing this method, appraisers can effectively estimate the value of a property based on its ability to generate income for its owners. This makes the income approach particularly relevant for investors who are primarily concerned with the profitability of the property, highlighting its financial viability in the real estate market.