Which of the following approaches would be most suitable for valuing a property that generates rental income?

The Income Approach is the most suitable method for valuing a property that generates rental income because it focuses on the present value of the expected future cash flows generated by the property. This approach involves estimating the net operating income (NOI) that the property will produce and then capitalizing that income using an appropriate capitalization rate.

For income-producing properties, such as apartment complexes, office buildings, or retail spaces, potential investors are primarily concerned with the return on their investment. The Income Approach effectively quantifies this by allowing appraisers to calculate value based on expected income, effectively reflecting the investment nature of such properties.

In contrast, the Cost Approach is primarily useful for properties where the cost of construction is a significant factor, while the Sales Comparison Approach relies on recent sales of comparable properties, which may not account for the income potential directly. The Development Approach, typically pertains to properties that are under construction or being planned, emphasizing land value and potential development opportunities, making it less relevant for already income-generating properties.