Real Estate Investing: Warren Buffet
Style
by Julie Broad
Stock investing has some fundamental principles that are
similar to real estate investing. Research is critical. Bad management can ruin a business just like it can ruin a
property. And, the best money is made in the long term 99% of the time.
And when you think of successful stock investing I don't
think there's a person in North America that wouldn't immediately think of Warren Buffet. So it
shouldn't surprise you that Buffet strategy and Buffet investing fundamentals are just as applicable to real estate
as they are to stock investing. Take my favourite seven quotes as examples and lessons for you:
- "No matter how great the talent or effort, some
things just take time: You can't produce a baby in one month just by getting nine women pregnant."
 It's the same thing with wealth creation. You can make money
fairly quickly in real estate, but cash is not the same thing as wealth.
Real wealth creation in real estate does take some time. It doesn't take a lifetime but it's not overnight. And
when you're just starting out it takes time to even make cash.
I know there are so many programs that promise quick cash, but it just doesn't happen that
way. Take our recent direct mail campaign. We sent out 4,000 letters and we've yet to close on one deal from
them. We're working on a few deals now ... but it's taken time.
Somebody sending 500 letters would likely face the same time frame. In other words, a massive effort today
doesn't make it happen that much faster... just like getting 9 women pregnant doesn't produce a baby in a
month. But a massive effort today could produce 9 babies in 9 months.
It will probably be 6 months before our
time, effort and money invested in the process so far pays us anything. And we really won't feel the benefits
for up to a year, but that is ok because we know it takes time. But when you're starting out you have to be
prepared for that. Yes you can make $50,000 in one month but it just won't be your first
month.
- "The smartest side to take in a bidding war is
the losing side."
When the price is going higher and higher you are losing your return. That is why you don't want to win in a
bidding war. Usually when bidding wars end the winner has overpaid. The winner is the last fool standing.
Nobody gets rich paying too much for an asset.
You're much better off, as a real estate investor, to find the
assets that aren't as desirable today and find a way to create value and make them desirable. This makes
more sense than buying the hot products at hot prices and hoping they continue to be the hottest ones.
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