Vlad, the appraiser, is most likely to use which method for appraising an apartment building with consistent income and expenses?

In the context of appraising an apartment building that generates consistent income and has stable expenses, the direct capitalization method is most appropriate. This method focuses on the income-generating ability of the property and is particularly relevant for investment properties like apartment buildings.

Direct capitalization involves calculating the value of the property based on its net operating income (NOI) and the capitalization rate, which reflects the expected return on investment. The formula typically used is:

Value = Net Operating Income / Capitalization Rate.

This approach is favored for its straightforwardness and effectiveness in reflecting a property's ability to produce income over time. By analyzing market data and assessing the expected returns, appraisers can provide a well-supported value estimation that investors are most interested in when evaluating multifamily properties.

While other methods, like the cost approach and sales comparison approach, have their uses, they are less suitable for properties with a consistent income stream. The cost approach focuses on the cost to replace or reproduce the building rather than its income potential, and the sales comparison approach looks at similar properties' sale prices, which might not effectively represent the value of a revenue-generating asset in its own right.