Which appraisal method considers the income-generating potential of a property?

The income approach is a method that specifically evaluates a property's value based on its potential to generate income. This method is particularly useful for investment properties, such as apartment buildings, commercial real estate, and other income-producing properties. By estimating the expected future cash flows from the property, often calculated through the net operating income, and applying a capitalization rate, appraisers can determine the present value of that income stream.

In contrast, the cost approach estimates value based on the cost to replace or reproduce the property, considering depreciation. The sales comparison approach assesses value by comparing the property to similar properties that have recently sold, focusing on market transactions. The market analysis approach generally involves studying the overall market conditions and trends rather than directly focusing on income generation.

These alternative methods do not take into account the income potential of a property in the same way that the income approach does, which makes the income approach the appropriate choice for this particular question regarding properties that generate revenue.