What kind of method is the Building Residual Technique primarily associated with?

The Building Residual Technique is primarily associated with the income approach to property valuation. This method is used to estimate the value of an income-producing property by determining the net income it generates and then capitalizing that income into a value.

In this technique, the overall value of the property is derived by considering the potential income it can produce and subtracting direct costs, such as operating expenses and a return on the land value. The remaining income, known as the "residual," represents the return to the building or improvements on the property. This focus on income distinguishes it from other valuation methods.

The income approach, specifically through the Building Residual Technique, is particularly effective in valuing properties where income generation is a key factor, such as commercial real estate. Other methods like the cost approach emphasize the cost to construct the property or derive value from comparable sales, while the sales comparison approach relies on the sale prices of similar properties. The market approach is a broader term that can encompass various methodologies, but in this context, the Building Residual Technique is closely aligned with the income approach.