What is the next step after estimating operating expenses in the income approach?

After estimating operating expenses in the income approach, the logical next step is to add miscellaneous income to determine Effective Gross Income (EGI). This is a crucial step in the income approach to property valuation, as EGI represents the total income the property is expected to generate after accounting for vacancy losses but before deducting operating expenses.

Once potential gross income is established, including any additional income sources such as laundry facilities, parking, or other ancillary services is necessary to provide a complete picture of the expected income from the property. This total informs subsequent calculations, such as deducting operating expenses to arrive at the Net Operating Income (NOI) and ultimately determining the property's value through capitalization.

While other options like deducting operating expenses or determining market rent are important steps in the process, they follow after establishing EGI, making the option regarding adding miscellaneous income the correct focus at this stage in the income approach.