INCOME APPROACH

[Gilbert Ross Jr]

I spoke to a seller of a property of a property today in regards to a four family in Newark, NJ. When I look at the comps in the area the deal didn't give me the ROI I was looking for. He tells me that if I use the income approach the property is worth double what he is selling the property. When should I use the income approach? I look at the comps and ROI based on rental income. I would like to know when the income approach should be used and not used.

[Ibrahim Hughes]

Gilbert I'm at a networking meeting so if you can, send me an email with the numbers. But my thoughts is that perhaps the wrong cap rate is being used to determine the value.

I'm not an expert but I would look at the comps and use that to determine the cap rate. And then plug that cap rate into whatever numbers you currently have on the income and expenses To come up with the true value.