What aspect of properties does the income approach primarily analyze?

The income approach primarily analyzes the potential rental income generated by a property. This method is essential for valuing investment properties, as it focuses on the revenue the property can produce over time. The underlying principle is that the value of a property is derived from its ability to generate income, which is particularly relevant for investors who are looking to purchase properties for rental purposes.

By examining the expected rental income, including factors like vacancy rates and operating expenses, investors can estimate the property's value based on its ability to generate cash flow. This approach is especially applicable in commercial real estate, where the income generated is a key determinant of value.

The other aspects, such as historical value, current market prices of comparable properties, and construction costs, are not the primary focus of the income approach. Instead, those factors might be relevant in other valuation methods, such as the sales comparison approach or the cost approach, but they do not drive the analysis within the income approach framework.