Literally every day, I ponder the following questions:
- When will the Fed stop buying bonds and allow interest rates to rise?, and
- When rates rise, how much will they rise by?
If you believe that the Fed is going to keep stimulating the economy for several years and/or that, when it stops, rates won’t rise by much, then you’re bullish on 5+ unit deals.
If you believe the Fed will stop imminently and / or that rates will jump sharply when it does, then you’re not touching 5+ unit deals with a ten-foot pole unless you have a strong value-add strategy.
Where do you come down?