The direct capitalization method would be a good choice of appraisal method in which of the following situations?

The direct capitalization method is particularly well-suited for properties that demonstrate consistent income and expenses over time, making option B the best choice among the given scenarios. This method is based on the principle that the value of an income-producing property can be derived by converting its expected income into value through a capitalization rate.

When income and expenses are stable and predictable, it allows for a more accurate estimation of the property's value. The appraiser can confidently apply the capitalization rate to the reliable income figures, resulting in a fair assessment of the property’s market value. This consistency in income is crucial, as it minimizes the uncertainty that can come from fluctuating financial performance, thereby enhancing the effectiveness and reliability of the appraisal.

In contrast, the other situations present challenges where the direct capitalization method might not yield accurate results. For instance, an apartment building in a very rural town with no comparable properties presents a lack of market data, complicating the capitalization rate assessment. A property with income that is contingent on future performance introduces significant risks and uncertainties, making it less suitable for direct capitalization. Additionally, properties that experience erratic income and expenses may require more complex valuation methods, like discounted cash flow analysis, rather than relying on the direct capitalization approach, as variability hampers the