I have studied the market in our area for close to 10 yrs now and we do not experience the fluctuations of some other areas of the US.

Like I have stated before. an investors "Basic" strategy should not really change due to market fluctuation, and in my opinion, balance is the key to any long term success regardless of market conditions!

Be very careful with this though, if you have shorter term financing like I do prepare for a down turn, I have no idea how much values fluctuate in your market, and if your note need to be renewed in a down market, you better have enough equity, or a pile of cash to bring in, I have seen many investors collapse because they harvested too much equity, I limit my portfolio to 40% LTV, im running about 35% on 21 properties right now, so i feel pretty safe, I was through the last crash and saw some guys i thought had it figured out crash and burn, just a word of warning. 

You can also start to follow the markets; 5/10 year Treasury, WSJ Prime, etc. to get an idea where fluctuating interest rates come from. 

It is not about profit it is about perceived profit and that is what conservative investors seek.Personally I believe that fluctuating real estate markets makes using a property as a bank is higher risk due to market shifts wiping out your equity but others see high leverage as a higher risk.

Work on rate later, since the market will fluctuate anyways, since lenders are typically in the same range based on market, and because you need the advice.  

I used 20% vacancy, just to be sure not to over estimate my profits being generated and also a fair to low daily rate, which will only fluctuate up in better then poor market conditions. 

@Christopher FreemanSince cap rate represents a risk premium it fluctuates by market, property type and class, demand, etc.

Carlos Cristiani Palm Springs has a unique fluctuation in population each year.

You know your expenses and predict your rents and occupancy rates you can play with and fluctuate.