Rate Capitalization:
In the field of commercial real estate, the capitalization rate (also known as cap rate) is used to express the projected rate of return on a real estate investment property. The cap rate of a commercial building is calculated by dividing the net operating income (rent minus expenses) by the building’s sale price.
Cap Rate= Net Operating Income/Current Market rate of property
It is denoted in percentage. Cap rate is useful for comparing the relative value of similar real estate. It represents the yield of a property over a year time horizon

Income Approach:
The income approach, also known as the income capitalization technique, is a real estate appraisal method that allows investors to estimate a property’s value based on the income it generates.
When applying the income approach to buy a rental property, an investor evaluates the amount of income generated as well as other aspects to figure out how much the property could sell for in today’s market. A lender will want to know the possible risk of payback if it extends a mortgage to the investor, in addition to analyzing whether the investor can earn from the rental property.
Income Approach= Net operating income/ Rate Capitalization

Rent capitalization method is different from Income approach method. Income approach and Rate capitalization method share an inversely proportional relationship. To calculate Income [approach, we first have to calculate Rent Capitalization