Understanding Fixed and Variable Expenses in the Income Approach for Property Valuation
In the Income Approach to property valuation, appraisers must first calculate a property’s Net Income by analyzing its expenses. These expenses are categorized as Fixed (e.g., real estate taxes, insurance) which do not change with occupancy, and Variable (e.g., maintenance, cleaning, management) which do. Appraisers rely primarily on the property’s actual operating history for this […]