The media has been taken by storm as a result of the recent release of Berkshire Hathaway’s 2013 year end results. So what does Warren Buffett’s investment performance and success over the last year tell inquiring real estate investors in 2014 and beyond? The following illustrates Berkshire Hathaway’s advice for investing this year:
Invest in Real Estate
In the most recent annual summary, it is revealed that the legendary investment giant increased its foray into the real estate market even further. More significantly; Buffett himself highlights more of his favorite investments – in real estate. Today, he is invested in farms, homes, mobile homes, mortgages and real estate brokerages.
Forget Values
Well, maybe don’t ignore values altogether, but tune out to constant fluctuations and PR tactics aimed at manipulating the market. Look at the individual investment and the income to be derived from it.
Make Your You Money When You Buy
Berkshire’s tactics are a constant reminder of the core investment principle of locking in gains when you go in. This applies equally to real estate stocks, as it does to wholesaling houses, fixing and flipping and acquiring rental properties and commercial real estate. Appreciation can provide a nice bonus, but should be considered no more than that.
Bet on America
Warren Buffett still makes well calculated bets. Although he says the surest bet of all is betting on America. Keep investing here and anticipate the nation to enjoy ongoing prosperity and growth. Buffett and Berkshire are betting the overwhelming bulk of their many billions on it.
Reinvest
Berkshire reveals its plans for surpluses and income gains are to reinvest them in growing their positions. Passive income may be the name of the game for many of today’s solo real estate investors. However, few really need more disposable income to increase their happiness level or to retire immediately. Reinvested, this cash flow can develop even more wealth and income for when it is really needed.
Charity
The competition to rank at the top of Forbes’ annual richest lists can be fun and thrilling, but all those billions can’t be taken with you. An increasing number of the world’s billionaires are announcing they plan to give their wealth away, and not to their children. So make it, but plan to give a lot of it away. Having a plan to ensure this is done the way you want isn’t something to procrastinate on.
Keep a Tight Team
Just two dozen headquarter staff run the multi-billion Berkshire Hathaway money making machine. That’s many, many times less the number that are on the payroll of so many entities which make a lot, lot less. Real estate investors do need assistance, but it’s clearly better to hire well and run a tight ship.
Circle of Competence
While Berkshire may be incredible diversified its top executive team says it is always careful to remain within their ‘circle of competence’. For individual real estate investors, especially those new to the game this suggests investing in homes, rentals and maybe retail shopping may be the things to invest in – those they understand the best. There is always room to grow and diversify as you learn, or hire others that are experts in other areas.
The High Desirability and Cost of Dominating an Industry
Don’t have to dominate the industry. Berkshire’s insight into the insurance industry shows just how expensive it can be to dominate. It often takes billions in losses sacrificed for market position. Just ask Zillow who has accumulated millions in losses to acquire new customers. It may be easier to dominate a niche.
