What is the expected return of principal known as at the end of an investment?

Capital recapture refers to the process by which an investor recovers the original amount invested in a property or project, typically through the cash flows generated from the investment. This concept is crucial for investors, as it indicates the return of the initial capital over the investment period. Once the investment matures or reaches a certain point, the capital recapture allows the investor to regain the principal amount, ensuring that they do not solely rely on appreciation or additional income for their returns.

Understanding capital recapture is essential in real estate appraisal and investment analysis, as it provides insights into the risk and expected returns associated with the investment. Investors often assess how quickly and efficiently they can recapture their capital when making investment decisions, which plays a vital role in evaluating the financial viability of different opportunities.

In contrast, capitalization generally refers to the process of converting income into value, often used in context with capitalization rates in real estate, which estimate the potential return on investment. Dividends are payments made to shareholders from earnings rather than from capital recovery. Net operating income is a measure of a property’s income after expenses but does not directly deal with the concept of returning the principal investment. Thus, capital recapture is the most accurate term for the expected return of principal at