You absolutely have to set a level of baseline stupidity and self-absorption when it comes to vetting and placing tenants.

Such as what happens if cap rate at exit fluctuates, what is the sensitivity analysis, what is the absorption on vacant units etc.

As a spec builder myself, I am very sensitive to absorption rates and overall desirability of an area.

A lender will require, and most likely order their own market study to determine if more units are needed, ascertain the absorption rate, and see what sort of units (private pay, medicare, medicaid, VA, memory care, etc.) are needed.

Recommend getting more experience and understanding writing a deal, understanding vacancies, absorption rates, bifurcating returns, sensitivity analysis on rent increases vs vacancies and cap rate to interest rate sensitivities and have a rockstar property managerIt’s a different animal.

@Mike Dami look at job growth, population increasing/decreasing in the past 5/10 years, new supply/demand, absorption rates, historical vacancy rate, median income and compare it to the national average, look at the comps,Just a few to help you narrow down your conclusion.

Further, if market indicators point to an increasing market e.g. demand is high, supply low, absorption rate on the rise, and there are pendings and actives that after adjustments support the contract price- then all of these pieces should be enough (IMO) to support the narrative that the opinion should be higher.

a) Safe area b) Low absorption ratesc) Good cashflow 

I'd also add that even here in Chatt lots of new inventory has or will come online and that's adding to a supply that continues to expand and that is having trouble with absorption in the first place. 

There is not only nothing economically making a foreclosure event possible but reality is there is enough absorption rate out there to buy the entire 08/09 collapse 4 TIMES!