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3 Lessons Learned from Warren Buffet's take on Real Estate Investing

Posted by Jeff Brooks on Monday, May 5th, 2014 at 9:13am.

Investing in Real Estate? Lets ask Warren Buffett, the infamous investor worth billions who is commonly known as “The Oracle of Omaha”.  His insight in investing I’ve always found to be a very simple, easy and straight forward. This article delves into two real estate investments he’s made. Here’s a few points I walked away with;

-Ignore the outside noise and chatter

When we were in the depths of the Great Recession Mr. Buffett was buying up companies left and right, while the rest of the market went running for the hills. His Berkshire Hathaway holding company bought Prudential Real Estate as his method of jumping into the real estate market. But years ago, he made a few real estate plays himself, ignoring the noise around him, he focused on the future and existing income and made a seemingly simple decision.

 -Look at not only existing income, but future potential

Along with a few friends (we all wish we had friends like Warren’s don’t we?) he purchased a Manhattan mixed use building. The existing tenant had reduced rent, but he knew what the real rents should be. His investment made a few decades ago pays out his initial investment regularly. If you purchased a three family today and in your retirement were able to collect the purchase price as income annually, would you worry about the surrounding present day marketplace as much? There are few investments you can rely on as heavily as a real estate investment.

 -You don’t need to be a savvy investor to be successful; you just need to be patient

If you’re looking to make a quick buck in real estate without any risk you’re going to be in for quite the surprise.  Real returns are found overtime. Especially so in real estate.  As you collect income off the property and pay off debt, you’ll experience one of the best investments of your lifetime.

Warren made out handsomely on his investments.  No investment is risk free in this world, especially when there’s reward involved. We just need to approach it with the simplicity that Warren suggests.  Present incomes don’t always justify present value. Ignore all the buzz around you and focus on the specific investment. No matter what the market does 1, 5, or 20 years from now, there will always be a finite amount land and people will need a place to live, work and play. If the potential is there and your patience can warrant it, real estate is always a great investment.

Jeff Brooks, Realtor, Hogan Associates, 129 Bellevue Ave, Newport, RI  02840 401-484-7368, Jeff Brooks the REALTOR 

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