What reversion cap rate to use in 5yr projection?
I have an offer out on a 60 unit MF property and would like to hear what others are using for their analysis and projections. I'm in DFW, looking at c class properties. If I'm buying at an 8 or 8.5 cap, wouldn't it be smart to increase it for projecting a cap rate when selling in 4-5 years? My thinking is that interest rates almost certainly will be higher at that point, so cap rates will not be able to stay as low as they are now. I'm seeing a lot of projections that use a 7.5 cap in 5 years and I can't imagine that is likely.