What method is used to value the income stream of a property?

The income approach is the correct method used to value the income stream of a property. This approach focuses on the revenue-generating potential of a property by estimating the present value of future cash flows, such as lease income, minus expenses. It is particularly applicable to investment properties, commercial real estate, and rental properties, where determining the earning potential is essential for buyers and investors.

By capitalizing the net operating income (NOI) through an appropriate capitalization rate, assessors can derive a value that reflects what an investor may expect to earn from the property. This systematic process is crucial for stakeholders in making informed investment decisions or assessing property value for taxation purposes.

In contrast, the replacement cost method evaluates how much it would cost to replace the structure, but it does not consider income generation. Cost-benefit analysis involves comparing costs and benefits of decisions but is not explicitly about property valuation. Comparative market analysis relies on comparing similar properties to determine value, which may not adequately reflect the income-producing capacity of a specific property. Thus, when focusing on income-producing properties, the income approach is the most relevant method for valuation.