What must be performed to derive the value of a property using the Income, Rate, Value (IRV) approach?

To derive the value of a property using the Income, Rate, Value (IRV) approach, the correct procedure involves dividing the net operating income (NOI) by the capitalization rate. This method is fundamental in the income approach to appraisal, which focuses on the income-generating potential of an investment property.

The rationale behind this is based on the capitalization process, where the expected income from the property is used to estimate its present value. By dividing the income by the rate, appraisers can determine what an investor should pay for the property based on its ability to generate income. Essentially, the capitalization rate reflects the return on investment that an investor expects to receive, allowing the valuation of the property to be calculated efficiently.

In summary, using the IRV approach provides a straightforward way to assess the economic value of income-producing properties by connecting the capitalized value directly to the income it generates and the rate as a measure of risk or return expectations in the market.