The going-in cap rate is what we usually called cap rate. The terminal cap rate is for resale value of a property.
Here’s an example. An investor buys a property for $100 million. First-year NOI is estimated at $6.0 million. Then the going-in cap rate is 6.0%. Three years later, the investor believes that the terminal cap rate is approximately 2.0% and the last year NOI is projected at $3 million. The resale value is estimated by $3 million divided by the 2%.
Thank you, this helps!
Thank you for the help!