Rising interest rates effect on Cap rates/value

[Eric Bilderback]

I was listening to a podcast the other day that had some smart guys on it that said values should go down 5-6% for every .25 rise in interest rates.  Would you agree with this?  I can see the math of what they are saying however I still don’t see less capital coming into multi-family specifically because the lack of any alternative to invest in.  If the rate goes up 2% then values go down 40% and in 5-10 years the bank is going to want to see a refi.  I would think the fed would be scared to raise rates to quickly for many reasons not the least of which would be all these loans coming due.  Do you agree that while the raising interest rates will “suck” it probably will not create to dramatic of an uptick in commercial foreclosures or am I off here?

Another question in an environment where values are decreasing due to interest rates how do you play that to your advantage?  Outside of already being rich and buying things at the new normal/low prices.