The income approach is a method used to estimate the value of an asset, typically real estate, based on the income it generates. This approach calculates the present value of future cash flows, such as rent or profits, that the asset is expected to produce. By analyzing these income streams, investors can determine how much they should pay for the property today. In real estate, the income approach is particularly useful for properties like apartment buildings or commercial spaces, where rental income is a key factor. By applying this method, investors can make informed decisions about purchasing or selling properties, ensuring they achieve a good return on their investment.