Which statement describes the primary focus of the income approach to valuation?

The primary focus of the income approach to valuation is capitalizing on net operating income to find property value. This method revolves around the premise that the value of an income-producing property is directly related to the income it generates. In this approach, appraisers typically calculate the net operating income (NOI), which is the total income generated from the property minus the operating expenses.

Once the NOI is determined, it is then capitalized using an appropriate capitalization rate, which reflects the return on investment that investors expect for real estate in general. This process allows for a systematic way of converting the income generated by the property into an estimated value, aligning with the idea that investors buy properties primarily for their income-earning potential.

Understanding this concept highlights why this option encapsulates the essence of the income approach, as it focuses on the revenue-generating capability of a property rather than other factors such as historical data, property size, or future market potential.