What appraisal method is used to calculate returns based on the cash flow from the property?

The income approach is the correct method used to calculate returns based on the cash flow generated from a property. This approach is particularly relevant for investment properties, where the primary concern is the income they generate. The value of the property is determined by estimating the potential income it can produce over time, typically using a capitalization rate to convert net operating income into property value.

In this method, an appraiser analyzes the expected future cash flows, considering factors such as rental income, operating expenses, and vacancy rates. The focus is on the property's ability to generate income, highlighting its potential for return on investment.

Other methods, such as the sales comparison approach, generally rely on comparable sales data to derive value based on similar property sales in the market. The cost approach involves estimating the cost to replace or reproduce the property, accounting for depreciation, which may not directly address cash flow. Lastly, the market analysis approach might involve broader market trends but does not specifically focus on the income generation aspect crucial in the income approach. The income approach thus stands out for its emphasis on assessing the financial performance of investment properties.