IAAO Managers Practice Test

The technique that involves developing Net Operating Income (NOI) and creating an Income, Rate, Value, Building, Lot, and Tenant (IRV BLT) table is the Building Residual Technique. This method is primarily used in the context of income-producing properties to estimate the value of a property based on its potential to generate income.

In this technique, the NOI is first calculated, which represents the income generated from the property after deducting all operating expenses. This figure is crucial as it reflects the property's financial performance. The IRV BLT table aids in organizing and analyzing the relationship between the income, the capitalization rate (rate), and the value of the property. By using this table, one can derive the building value based on the anticipated income that the property can produce.

This approach is particularly useful for appraisers in determining value based on income, especially in scenarios where comparable sales data might be limited or insufficient. It demonstrates a clear and systematic way to arrive at an estimate of value through income analysis. Therefore, it is appropriate for situations involving rental properties and investment assessments, emphasizing the importance of understanding NOI and its direct impact on property value.