Which appraisal approach is most often used for a property that will be purchased for investment purposes?

The market comparison approach, also known as the sales comparison approach, analyzes recent sales of similar properties to establish a value. While useful for determining fair market value, it does not account for income potential, which is crucial for investment properties. This method is more applicable for residential properties rather than income-generating assets.

The cost approach estimates a property's value based on the cost to replace or reproduce it, minus depreciation. While it provides an understanding of the physical value and replacement cost, it does not evaluate income potential, making it less relevant for investment decisions where revenue generation is paramount.

Market data approaches typically involve analyzing various economic indicators and trends to assess property values. Although it can provide context for potential price appreciation, it lacks the direct focus on income generation that the income approach offers, thereby making it less effective for investment property appraisal.