Michael Linton | FL Broker License BK703722 | 39 Years Experience | (312) 612-1031
See how IRR moves across hold period and exit cap shifts — the same matrix LP underwriters build.
| Hold ↓ / Exit Cap Shift → | -50 bps (5.75%) | -25 bps (6.00%) | 0 bps (6.25%) | +25 bps (6.50%) | +50 bps (6.75%) | +75 bps (7.00%) |
|---|---|---|---|---|---|---|
| 3-Year Hold | 17.5% | 13.8% | 10.1% | 6.5% | 2.9% | -0.7% |
| 5-Year Hold | 15.8% | 13.8% | 11.9% | 10.0% | 8.2% | 6.3% |
| 7-Year Hold | 14.8% | 13.6% | 12.4% | 11.2% | 10.0% | 8.8% |
| 10-Year Hold | 13.7% | 13.0% | 12.3% | 11.6% | 11.0% | 10.3% |
IRR sensitivity across hold period and exit cap shift. Cap rate expansion of just 25 bps over a 10-year hold can shave 200+ bps off IRR. Green = institutional target zone (12%+); red = below cost of capital.
Underwriting, indicative terms, and lender match across every major Florida CRE program — instantly.
Enter your equity, year-one NOI and cash flow, the NOI growth rate, the going-in cap rate and your base-case exit cap rate. The matrix shows IRR for each combination of hold period and exit cap shift, so you can see how much of the return depends on selling at a good cap rate.
| Field | What it means |
|---|---|
| Initial equity | Cash invested |
| Year-1 NOI and cash flow | Starting income |
| NOI growth | Percent per year |
| Going-in cap rate | Percent |
| Base exit cap rate | Percent |
| Field | What it means |
|---|---|
| Base-case IRR | 5-year hold at the base exit cap |
| IRR sensitivity matrix | IRR by hold period and exit cap shift |
Cap rates move. A deal bought at a 6% cap that sells at 6.75% loses much of its appreciation. Lenders and experienced buyers assume the exit cap is 25 to 75 basis points above the going-in cap.
Look down a column to see how holding longer changes your return, and across a row to see how exit cap risk changes it. If returns fall below your hurdle with a small cap shift, the deal depends too much on the exit.
Answers by Michael R. Linton, NCREA, CREIPS, Florida Broker #BK703722. Educational only; not tax, legal or investment advice.
Every Linton Global Solutions calculator is built to institutional underwriting standards — use them together to stress-test any Florida CRE acquisition, hold, or disposition.
Capitalization rate from NOI and purchase price — the standard yield metric in CRE.
Debt service coverage by asset class — 1.20x multifamily to 1.55x hospitality.
Monthly P&I, annual debt service, balloon, and full amortization schedule.
Net Operating Income from rent roll and operating expenses.
Loan-to-Value sizing for stabilized, value-add, and bridge scenarios.
Levered yield: annual pre-tax cash flow divided by equity invested.
Multi-year hold pro forma with exit cap — the institutional return metrics.
Solve maximum loan amount from NOI, DSCR minimum, rate, and amortization.
Stabilized NOI divided by total project cost — the value-add and ground-up benchmark.
Enter the lot size and the FAR your zoning allows to see the maximum building area and the footprint per floor.
Physical occupancy counts leased units.
Price a defaulted note the way buyers do: expected recovery, minus costs, discounted at your target return over the time it takes to resolve.
Size a loan the way credit tenant lease lenders do: from the rent and the lease term, not just the property value.
The minimum occupancy required to cover debt service plus operating expenses.
Quick price-to-gross-rent ratio — the multifamily rule of thumb.
Model current vs new debt, cash out at refi, and post-refi DSCR.
Preferred return plus promoted-interest tiers for JV and syndication splits.
bps to percent, plus what a rate or cap rate move costs in dollars.
NOI ÷ Loan — the cap-rate-independent leverage test every CMBS lender runs.
Construction and value-add leverage sizing across land, hard, soft, and reserves.
Balance the capital stack — senior, mezz, pref, sponsor, LP — to the dollar.
Normalize face rent for free rent, TI dollars, and annual escalators.
Owner-occupied CRE financing — bank/CDC splits, monthly P&I, true cost.
All-in annualized rate including origination, exit fee, and legal — not just the coupon.
Interest reserve sizing, net usable proceeds, and total financing cost.
Benchmark against submarket comps — flag undervaluation discounts of 20%+.
3-constraint conduit underwriting: DSCR, LTV, and debt yield tested simultaneously.
Bridge senior debt to sponsor equity — model the blended cost of capital.
Reclassify 20–35% of basis to 5/7/15-year — year-1 tax savings ROI 8–10x.
Compare total lease cost vs net buy cost — including principal paydown and appreciation.
NOI growth, debt service, exit value, and equity multiple in one institutional projection.
Net Present Value at your hurdle rate — the accept/reject test institutional investors run.
OpEx ÷ EGI by asset class — the fastest red-flag check on operating statements.
Quantify tenant improvement dollars as % of PV rent and required rent bump to recover.
CMBS prepayment penalty estimator — PV of lost yield to the lender.
Fix-and-flip math — purchase, rehab, carry cost, selling costs, annualized ROI.
Full wholesale or fix-and-flip pro forma — purchase, repairs, carrying costs, financing (LTV/LTC), and annualized ROI.
Fixed, CPI, or stepped escalations alongside CAM reconciliation and pro-rata share.
Sharpe & Sortino vs strategy-bucket benchmarks (core, core-plus, value-add, opportunistic).
County millage rates with post-sale reassessment for every Florida county.
Wind, flood, and general liability $/SF by asset class and Florida zone.
Identify taxable boot in your 1031 exchange before closing the replacement.
Depreciation recapture, federal LTCG, NIIT, and 1031 deferral modeling.
Florida documentary stamp tax on the deed and the mortgage note.
Buyer and seller closing-cost itemization with FL-promulgated title rates.
Stabilized real estate IRR is dominated by exit cap rate. A property bought at a 6% cap and sold at a 6.5% cap gives back ~8% of value at exit — wiping out 200+ bps of IRR. Hold period magnifies this: a 50 bps cap expansion over a 3-year hold is brutal; over a 10-year hold, NOI growth can absorb much of it.
This matrix lets you see both dimensions at once — the standard institutional stress test.
Pair with Pro Forma, IRR + EM, and Risk-Adjusted Return.
Free sensitivity review on your Florida CRE deal.
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