Definitions for

**"DIRECT CAPITALIZATION"**A capitalization method, which divides a property's first year net operating income by an estimated general capitalization rate to develop a total property estimate. If an income property produces a first year net operating income of $30,000 and the market indicates a general capitalization rate of 10% for comparable properties, the direct capitalization estimate of the value of the total property would be ($30,000/.10) or $300,000.

Converts an estimate of annual income into an estimate of value, directly, by dividing the annual income by an appropriate rate or by multiplying the annual income by an appropriate factor.

A method used to convert an estimate of a single year's income expectancy into an indication of value in one direct step, either by dividing the income estimate by an appropriate rate or by multiplying the income estimate by an appropriate factor.