Income approach to value and cap rate development

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8 Terms

1
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Income rate

ratio of one years income to value of property

2
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Discount rate

interest rate used to convert future payments into PV

3
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Yield rate

rate of return on capital for specific time period

4
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direct cap

method used to convert estimate of single years income into indication value

5
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Income streams

There is: potential gross, effective gross, NO, equity, mortgage, land, building income

6
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Potential gross income multiplier

amount get if 100% occupied

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what does building cap rate have

IT will include interest rate and recapture rate

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What will land cap rate have

It will only have interest rate