The Real Estate Encyclopedia
Category - Real Estate Glossary - Real Estate Terminology
1.  A process of reflecting future income in present value and used to determine the value of property by considering its net income and a percentage of reasonable return on the investment.

2.   Capitalization occurs when items owed on a loan are treated as part of a new, principal balance. When arrears are capitalized, the amount of the arrears is included in the principal before the interest is applied. Also a mathematical process for estimating the value of a property using a proper rate of return on the investment and annual net income expected to be produced by the property.
[Income Rate = Value]

Real Estate Glossary - Real Estate Terminology
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