New Jersey Real Estate Exam Practice Question
Which appraisal approach is most often used for a property that will be purchased for investment purposes?
Correct Answer: B
Rationale: The income approach is most suitable for investment properties as it evaluates the potential revenue generated by the property, considering factors like rental income and operating expenses. This approach helps investors assess the property's profitability and return on investment.
Market comparison (A) focuses on comparing similar properties to determine value, which is less relevant for investment analysis. The cost approach (C) estimates value based on construction costs, not income potential. Market data (D) is a broad term that can include various metrics but lacks the specific focus on income generation critical for investment decisions.
Unlock All Questions
Subscribe to Premium for full access to all practice questions, detailed rationales, and performance tracking.
Subscribe Now