Ground Rent
The rent paid for the use of land under a ground lease. Capitalizing ground rent is one technique for estimating land value when land sales are scarce.
Related Terms
Ground Lease
A long-term lease of land only, with the tenant constructing and owning the improvements during the term.
Ground Rent Capitalization
A land valuation method that estimates land value by capitalizing the ground rent (the rent paid for the use of land only, without improvements) at an appropriate capitalization rate..
Land Value
The market value of a parcel of land as if vacant and available for development to its highest and best use.
More in Income Approach
View allCapitalization Rate (Cap Rate)
Cap RateThe ratio of a property's net operating income to its market value or sale price, expressed as a percentage.
Gross Rent Multiplier (GRM)
GRMThe ratio of a property's sale price to its gross monthly (or annual) rental income.
Net Operating Income (NOI)
NOIThe annual income remaining after deducting all operating expenses from effective gross income, but before deducting debt service (mortgage payments) and income taxes.
Effective Gross Income (EGI)
EGIPotential gross income minus vacancy and collection losses, plus other income (laundry, parking, late fees).