A term that denotes the relationship
between a single years projected income and
the value of the property. Income rates are
not rates of return, but rather standard
measures that are used for estimating
values.
The overall capitalization rate and the
equity capitalization rate are examples of
income rates. Income rates should be clearly
differentiated from yield rates. Yield rates
represent that return to an investor based
on all future benefits arising from
ownership, e.g. cash flows from operations
and sale proceeds.
Yield rates are associated with yield
capitalization techniques, while income
rates relate to
direct capitalization.
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