Evaluating Income Property

[satish groups]

Income property is becoming more attractive to investors looking for a
better return on their money. With today's low interest rates, income-
producing properties such as apartments and duplexes can produce
exciting returns. As with any type of property, the value of income
property is what someone is willing to pay for it. But, the main
determinant of value for income property is the net income it will
produce.

As we'll see later, the income approach should closely correlate with
the market value under normal market conditions. Buyers of residential
income property will want to know the answers to several questions not
normally asked by home buyers. First, what is the amount of cash flow
the property will generate? Second, how much actual net income will it
produce? Third, are the tax benefits that the property will provide
the investor? Cash flow can be described as the amount of money
collected as rental income each month.

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