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Exit Cap Rate Sensitivity Analysis

See how different exit cap rates affect your property's sale value. Model profit or loss across a range of scenarios to stress-test your disposition strategy.

Exit Assumptions

Stabilized NOI at time of sale

$

Original purchase price

$

Renovation, closing costs, etc. (optional)

$

Exit Valuation by Cap Rate

Enter projected exit NOI to see valuations across cap rates

How Exit Cap Rate Analysis Works

Exit Value = Exit NOI / Cap Rate

Cap Rate Compression

When cap rates decrease (compress), property values increase for the same NOI. A 50-basis-point compression from 5.5% to 5.0% on a $600K NOI property increases value from $10.9M to $12.0M — over $1M in additional equity.

Cap Rate Expansion

When cap rates increase (expand), property values decrease. Rising interest rates, market uncertainty, or submarket weakness can push cap rates higher. Sensitivity analysis helps you understand downside exposure before it materializes.

Why Exit Cap Rate Sensitivity Matters

Disposition Timing

Understand how cap rate movement affects your exit proceeds. Know your breakeven cap rate and the range where the deal still makes money.

Investor Communication

Show investors best-case, base-case, and worst-case exit scenarios. Cap rate sensitivity tables are standard in investment committee presentations.

Acquisition Underwriting

Conservative underwriting assumes cap rate expansion at exit. Knowing your sensitivity to a 50-100bp move ensures you are not overpaying at acquisition.

Model exits across your entire portfolio.

BubbleGum BI tracks NOI and implied cap rates daily across every property. Cai generates disposition analysis with sensitivity tables so you know exactly when to sell — and when to hold.

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Frequently Asked Questions

What is a typical exit cap rate for multifamily?
Exit cap rates vary significantly by market, asset class, and age. Class A urban multifamily may trade at 4.0-5.0% cap rates, while Class B suburban assets typically range 5.0-6.5%. Class C and value-add assets may trade at 6.0-7.5% or higher. Always benchmark against recent comparable sales in your submarket.
Should I underwrite a higher cap rate at exit than at acquisition?
Yes. Conservative underwriting typically assumes 50-100 basis points of cap rate expansion at exit relative to the going-in cap rate. This accounts for market cycle risk, asset aging, and the possibility that interest rates move higher over the hold period.
How does NOI growth offset cap rate expansion?
If your NOI grows faster than cap rates expand, property value still increases. For example, 20% NOI growth with 50bp of cap rate expansion may still result in a profitable exit. This is why value-add investors focus on NOI improvement — it provides a buffer against adverse cap rate movements.
What is the breakeven exit cap rate?
The breakeven exit cap rate is the rate at which your exit value equals your total cost basis (acquisition price + capital invested). Any cap rate below breakeven produces a profit; any cap rate above produces a loss. This calculator shows profit/loss at each rate so you can quickly identify your breakeven point.
How does BubbleGum BI help with exit planning?
BubbleGum BI tracks real-time NOI performance and market cap rate trends across your portfolio. Cai can generate exit sensitivity analyses using actual property data, helping you identify optimal disposition timing and prepare investor-ready analysis for hold/sell decisions.