How do lenders know what CAP rate to base a refinance on?

[Leo B.]

I'm starting to look into performing a 1031 exchange into an apartment complex and am looking for more information on value adds and how a lender obtains their valuation based on the CAP rate. See example below.

- 30 unit complex

- 80% occupancy

- 6% CAP rate based on current income and expenses

- $700K purchase price

- Value add is performed via renovation and increasing rents

- CAP rate is now 8% based on value add

- My assumption is value is higher based on the new CAP ratea dn I want to refinance and pull cash out.

My questions are:

1. How will lender value property after value add?

2. Is there a CAP rate for each specific area? How is this obtained?

3. For lenders, is there seasoning required for new rents to be coming in to be counted in the new CAP rate?

4. Is there a typical seasoning period for refinancing an apartment complex after initial purchase?

I'm in the beginning stages of research on this topic.  Thanks in advance for your replies!

-Leo