Mar 05 2025 11 mins 1
I just got back from an amazing trip to Sedona after RaiseFest in Phoenix! Great hikes, pickleball, cigars, and, of course, plenty of real estate talk. One topic that kept coming up was exit cap rates.
Many investors default to widening their exit cap rate for conservatism but in today’s market, that strategy doesn’t always make sense, especially for value-add deals. Your exit cap rate should reflect not just conservatism but also the transformation of the asset from purchase to sale.
In this video, I break down why the conversation around exit cap rates has changed, why some investors are even projecting flat or compressed exits, and how you can adapt your underwriting strategy to today’s market.
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