They are very well organized and very professional, and their reported past results are exceedingly good at 24% avg annual return, but that was then (lowest interest rates in 90 years, CAP rates compressed from 8 to 3) and now is now. 

Really compresses the wealth building time continuum from the look of it.

Well if you are buying at an 8% going in today, I could argue that compressing it over 5 yrs (again depending on asset and market) to 7% is still a realistic expectation, especially if your sensitivity shows you can still make an okay return if cap rates do continue to expand.b) you need to be more patient.  

If interest rates come down or cap rates compress or both, that will increase values.

The market matured and margins compressed.

For example, does it have to be paved or can it be a compressed earth/gravel driveway?

@Brock Mogensen, I have a feeling, for certain deals, this question and/or the assumption of cap rate compression is not going to be quite as viable or relevant.I know there is a lot of nuance in that statement.  

In fact, if appreciation is just 4-5% per year over the next two years, it almost certainly will.That's almost certainly what your syndicator is assuming - 4-5% rent growth/ NOI growth per year, levered to the the max, and/or cap rate compression (which is the same as appreciation in your duplex world). 

The appreciation has been great there, but yield is too compressed at this point.

The market has matured and margins have compressed.