Passive Real Estate Invesment

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I am contemplating investing for the first time in a real estate venture. It is for a large multifamily apartment building. The big question is the projected sales price at the end of the five year holding period. If interest rates continue to climb the sale price will be affected. Is there any way to account for that risk?

Yes, underwrite for a higher exit cap rate and see if the deal still makes sense. Better yet, underwrite for a range of exit cap rates to see where the break even point is and how likely that point can be reached.

E.g., if your historical cap rates range for class C is 8-12% and you start losing money if you sell at 15%, then the deal has a high chance of success. If, on the other hand, your break even is at 9%, then chances of success are much lower. This assumes, of course, that your income & and expenses will be close to projected or better.