Last year, we noted that consensus estimates are often wrong. A year later, this has proven true yet again. There have been no rate cuts and 1, 3, and 5-year Treasury yields are significantly higher than they were a year ago. We cannot predict the future, so we focus on driving returns with controllable inputs like cost basis and NOI growth vs. betting on unpredictable macroeconomic events. If you'd like to participate in Sweetbay's next project, be sure to click the "Register" button on our page (Sweetbay Capital) for access to future opportunities! #realestate #investing #multifamily #privateequity
How smart is the “smart money”? Investors often view the bond market as “smart money” that can predict economic outcomes. While the yield curve can be a helpful (though imprecise) indicator of impending recession, it’s worth noting how wrong markets usually are about the future – for example, about interest rates, which have a huge impact on asset values (see below). Markets, consensus estimates, and expert forecasts are usually wrong because predicting the future is extremely difficult. Consistently successful investors are not “right” more often than everyone else – they place asymmetric bets based on conservative, thoroughly researched assumptions incorporating an ample margin of safety. At Sweetbay, we don’t pretend to know the future. We acquire properties with clear upside regardless of whether local market rents move up, down, or sideways. We assume that unpredictable factors (interest rates, exit cap rates, etc.) will move against us, and if that kills a deal, we walk away. This makes it tough to get deals done in today’s market, but our job isn’t to do every good deal – it’s to only do good deals. Click the "Register" button on our LinkedIn page (Sweetbay Capital) to see our upcoming investment opportunities. #realestate #investing #multifamily #privateequity
