What is the first step in the income approach?

The first step in the income approach is to research income and expense data. This foundational step is crucial because it involves gathering accurate and relevant information about the property's operating income and expenses. Understanding these figures enables the property tax consultant to assess the property's overall financial performance, determine its potential income generation, and identify typical expenses associated with properties in the same market.

This information forms the basis for subsequent calculations, such as estimating vacancy rates and collection losses, assessing total operating expenses, and applying capitalization techniques. By starting with thorough research, the consultant can ensure that the assumptions made later in the process are well-supported and based on real data, which ultimately leads to a more accurate valuation of the property.