Income capitalization approach - real estate - usa  - This is a set of procedures in which a real estate appraiser derives a value indication for an income producing property by converting its anticipated benefits (cash flows and reversion) into property value. This conversion can be done in two ways. Firstly one years income expectany can capitalized at a market derived capitalization rate or at a capitalization rate that reflects a paricular income pattern such as a return on investment. Another way is for the annual cash flows for the holding period and reversion to be discounted at a specified yield rate.