Direct Capitalization versus Yield Capitalization


Direct capitalization takes into account the current income and expenses generated by a property and its concluded net operating income.  A direct market capitalization rate derived from similar sales is used in the analysis to conclude an indication of market value.     


The summation of present values over time is accomplished via a Discounted Cash Flow Analysis.  DCF analyses are usually accomplished / generated using a computer, since the calculations over a number of years can be computed in seconds versus hours.  


The methodology that describes the discounting of net future cash flows by an overall rate that mirrors a property's anticipated future income, its change in value based on its yield rate is called Yield capitalization.  


Contact us with your questions or concerns regarding direct or yield capitalization or regarding your specific appraisal assignment in Nevada at 1-702-568-6699.  We can also be contacted via e-mailed at  



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Commercial Real Estate Appraisals in the Las Vegas & Henderson, Nevada Area.