An annuity factor is a mathematical figure that shows the present value of an income stream that generates one dollar of income each period for a specified number of periods.
A Building Capitalization Rate (Cap Rate) is a metric used in real estate to convert an income stream from a property into a lump sum value. It is a crucial tool for appraisers and investors to estimate the value of a property.
Capitalizing in real estate is the process of estimating the present value of an income stream, setting up the cost of an asset on financial records, or supplying a business with capital.
Capitalized value refers to the present value of a future income stream, discounted at a specific rate called the capitalization rate. It is a crucial concept in real estate valuation for properties producing regular income.
Discounting is the process of estimating the present value of an income stream by reducing expected cash flow to reflect the time value of money. It is the opposite of compounding, and mathematically, they are reciprocals.
An income stream refers to a regular flow of money generated by a business or investment. It can come from various sources such as rentals, dividends, interest, or any other form of residual income.
A level-payment income stream refers to a series of equal payments made at regular intervals over a specific period of time. It is typically associated with annuities, mortgages, or other financial instruments.
A sale-leaseback allows the owner of a property to sell it and simultaneously lease it back from the buyer, converting from owner to tenant while freeing up capital for other uses.
