{"id":108076,"date":"2019-03-01T11:00:56","date_gmt":"2019-03-01T18:00:56","guid":{"rendered":"https:\/\/www.biggerpockets.com\/renewsblog\/?p=108076"},"modified":"2021-03-16T14:52:34","modified_gmt":"2021-03-16T20:52:34","slug":"real-estate-investors-stop-skinny-dipping","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/real-estate-investors-stop-skinny-dipping","title":{"rendered":"Warren Buffett\u2019s Advice to Real Estate Investors: \u201cStop Skinny Dipping!\u201d"},"content":{"rendered":"

Have you ever met someone famous? Or gotten to know them?<\/p>\n

Be honest\u2014after the initial awe wore off, were you disappointed?\u00a0Most people are.<\/p>\n

One day, my pastor relayed how he grew up in awe of a Boston Red Sox legend. He was thrilled every time that player went to bat, and he dreamed of playing on the same field someday. He worked hard for 18 years, chasing that dream.<\/p>\n

Then, he met his idol. Actually, he didn\u2019t only meet him\u2014the legend became his coach!<\/p>\n

And that\u2019s when the disappointment set in. The guy was anything but the hero he played on TV. He was quite the contrary, in fact.<\/p>\n

My Encounter with a Real Estate Idol<\/h2>\n

I was in a room a few months back, when one of the nation\u2019s leading multifamily syndicators<\/a> showed up unexpectedly and grabbed the mic. I was delighted!<\/p>\n

I had heard of his exploits but never listened to him speak. But now, there I was, seeing a guy in-person whose story may ultimately go down in history.<\/p>\n

He talked about how bullish he was on multifamily. As the author of a humbly-titled book on the subject, I obviously agreed\u2014at least about the multifamily business and its long-term prospects.<\/p>\n

Then, he said (I\u2019m not quoting him verbatim),\u00a0\u201cDon\u2019t worry about overpaying for multifamily. Just get a great property in a great location, and get in the game for the long haul.\u201d<\/p>\n

I looked around the room. Was I alone in being shocked? Was this some kind of a joke?<\/p>\n

\"man<\/p>\n

Related:\u00a0<\/strong><\/em>Thinking About Buying a Multifamily? STOP! Wait Until You Read This!<\/a><\/em><\/p>\n

I waited for the punchline\u2014that he never delivered. He was serious.<\/p>\n

And I later learned one of my investors actually saw a document showing that he was\u00a0buying a large multifamily deal at around a 1 percent cap rate<\/a>.<\/p>\n

I spent some of that day wondering about my life and priorities. My company has been passing on dozens\u2014no hundreds\u2014of multifamily deals over the last four years.<\/p>\n

It was always something. Over-priced!\u00a0<\/em>Marginal location!\u00a0<\/em>Out-bid! (Again.)\u00a0<\/em><\/p>\n

We were sitting on the sidelines while this truly brilliant and savvy guy has amassed a fortune in multifamily and other holdings. He drives the same car as the British royals and has at least one private jet.<\/p>\n

Am I the One Who’s Out to Lunch?<\/h3>\n

What’s more, a few weeks ago, I saw the most recent annual report of multifamily sales from CBRE. The headline proclaimed, “2018 Multifamily Demand Highest Since 2000.”<\/p>\n

Here are a few highlights from the report:<\/p>\n