Short Term Investments in Uncertain Times

In the first week of November, the Fed raised interest rates for the 6th time this year to combat inflation. That hike of 75 basis points is the 4th in a row of that size, adding up to a current 4% Fed Funds Rate. Shortly thereafter the recent CPI report came out, and reported an increase of 0.4% MoM , leaving the YoY rate at 7.7%, which is still very high but not as high as the market expectations.

The one word we can use to describe today’s market is: unpredictable. This image below is a chart of the FOMC Member’s predictions of the Future Fed Funds Rate. As you can see, there is some disagreement around the severity and length of this struggling economic cycle. As we continue into 2023 and battle through these times of inflation, we need to understand that there is significant volatility within the market that we aren’t used to in recent history.?

Mortgage rates rose back over 7% to 7.08% on November 14th , continuing the challenge of both buying and borrowing in today’s market, which is exactly the Fed’s goal until inflation comes back down to 2%. The current hesitancy to buy, long-term uncertainty of mortgage rates, and the high cost of debt is leading us to be cautious.

As we look for new projects and investments, starting a long-term 3-year construction window with another 5-year stabilization period is not ideal in the current market. We don’t think that all long-term developments are a bad idea, just when surrounded by the uncertainty of the market, cash outlay for quicker return projects is more appealing, and less stressful. Finding an investment with a 12 to 18-month investment life is where we are focusing our energy.

That focus has pointed us to three alternative short term investment projects, with minimal risk from our due diligence compared to traditional development projects. The first, with a projected 127.59% ROI on $289k equity investment, another with a projected 142.8% ROI on a $795k equity investment, and the largest with a projected 198.75% ROI on a $2.3 million equity investment.

Please feel free to reach out to [email protected] for an NDA and to then receive more information about the opportunities.?