Income capitalization refers to the process of determining the value of an asset, such as a property or investment, based on the income it generates. It involves calculating the present or future worth of the income stream from the asset and using it as a basis for estimating its overall worth. This method is commonly used in real estate or business valuation to determine how much an asset is worth based on the income it can generate.
Full definition
Synonyms for individual words can be found below.
«income»
«capitalization»
Sentences with «income capitalization»
- The expected sales price of the developed property can be estimated using the simple income capitalization approach in the case of income producing properties. (xelonline.com)
- This is demonstrated in a footnote to the Henderson Land 2014 audit where it is stated «The valuations of completed investment properties in Hong Kong and mainland China were based on income capitalization approach which capitalized the net income of the properties and taking into account the reversionary potential of the properties after the expiring of the current lease.» (mjwhitman.pressbooks.com)
- But then he or she would look at the expected stabilized income stream after the improvements and repairs are made; next, use the standard income capitalization approach to estimate its resale value; and finally do a discounted cash flow analysis to decide if overall return would be satisfactory, considering the time and capital required. (biggerpockets.com)
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