Direct capitalization is a valuation method used in real estate to estimate the value of an income-producing property by dividing the net operating income (NOI) by the capitalization rate (cap rate).
The Income Approach is one of three methods used to appraise real estate value, primarily utilized for properties that generate consistent income, such as apartments, office buildings, hotels, and shopping centers.
Yield Capitalization is a method used in real estate to derive the lump sum value of an income stream by a discounted cash flow (DCF) approach. This method is deemed more sophisticated compared to Direct Capitalization as it factors in the timing of cash flows and anticipates growth or decline in the asset value.
