Building Capitalization Rate

Definition of "Building capitalization rate"

Valerie Dirks real estate agent

Written by

Valerie Dirkselite badge icon

Keller Williams Realty

Rate of return of capital invested in building improvements. Is segregated from land investments and provides a method of separating property income streams between improvement and land investments. Normally the yield is stated as an annual rate of profit per dollar of investment. Three factors are necessary in order to correctly compute the building capitalization rate: (1) The amount of the investment. (2) The size and duration of the income stream. (3) The eventual resale proceeds.

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Real Estate Terms

Specific portion of a larger land tract. A parcel can also be a lot in a property subdivision. ...

Amount of money that must be charged or invested in the initial stage of a business transaction to demonstrate good faith as well as to help offset some expenses. For example, the customary ...

Legal obligation to pay for a benefit received as if a contract has actually occurred. This may arise in a few cases so that an equitable situation occurs. An example is when a homeowner ...

Reward for investing. The real estate investor must compare the anticipated return for an investment with the associated risk. The return includes: Appreciation (or depreciation) in ...

Also known as adjoining landowners or abutting owners, adjoining owners are property owners whose property touches a common property. The definition of adjoining property owners is those ...

Clay-baked, glazed piping that is not damage by water. It is often used in underground drainage. ...

Basis for the valuation of property acquired from a decedent for tax purposes. The unified transfer tax in 1976 provides for the valuation of property to be the adjusted basis immediately ...

Wires, such as for electricity, places beneath the floor of a structure. ...

The American Planning Association, also known as APA, is a nonprofit professional organization representing the US’s urban planning field. The APA provides extensive educational ...

Popular Real Estate Questions