Investment Value
The value of a property to a particular investor based on that investor's own requirements — financing, tax position, yield expectations — as distinct from market value, which reflects the typical participant. The same property can have different investment values for different owners.
Related Terms
Market Value
The most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus..
Income Approach
A valuation method that estimates a property's value based on the income it generates or is expected to generate.
Use Value
The value a property has for a specific use or to a specific user, which may differ from its market value at highest and best use.
More in Income Approach
View allCapitalization Rate (Cap Rate)
Cap RateThe ratio of a property's net operating income to its market value or sale price, expressed as a percentage.
Gross Rent Multiplier (GRM)
GRMThe ratio of a property's sale price to its gross monthly (or annual) rental income.
Net Operating Income (NOI)
NOIThe annual income remaining after deducting all operating expenses from effective gross income, but before deducting debt service (mortgage payments) and income taxes.
Effective Gross Income (EGI)
EGIPotential gross income minus vacancy and collection losses, plus other income (laundry, parking, late fees).