No one can argue the fact that Warren Buffett is a great investor. His track record over multiple decades is just too good to be ignored. As you know, he prefers to purchase companies or stock in companies. Nonetheless I look to leverage greatness any where I can in my business.
I found the following three Buffett quotes fit my business model.
Quote 1: “Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
I am a buy and hold investor that looks to secure rental properties that produce monthly cash flow. I don’t need market appreciation to continue growing our business. In fact too much appreciation would likely slow our business down as we would have to stop buying because we don’t buy skinny deals; we define a skinny deal as one with under $200 in expected monthly cash flow.
I would love to hold all our properties for 10+ years and let the cash flow increase with inflation. Someday we will undoubtedly sell the houses we own and 1031 Exchange the profits into apartment buildings, but until then we are happy with all our little houses.
Quote 2: “It’s never paid to bet against America. We come through things, but its not always a smooth ride.”
I love this quote because it goes against all the noise we see on TV and read in the papers. The financial world is without question going through a hard time right now, but we will come out of this eventually.
By most accounts we have been in this real estate and debt laden cycle for 4+ years now. The cycle might have 3-6 more years to complete but it will eventually be over and we will be back to growth again.
You can chose to sit on the sidelines and wait for the all-clear sign or you can get in the market and look for deals that are on sale right now.
I chose to invest now because I want to maximize my profit when the market turns.
Quote 3: “Price is what you pay. Value is what you get.”
Over the last two and half years I have purchased dozens of properties at what I consider land value. I believe the prices are artificially low, but the value has never been higher. We have purchased multiple properties for under 40K that produce $900 in rental income.
The value of these purchases will only rise with time, inflation and the slow rise to replacement cost.
Picking only 3 Buffett quotes is a tough challenge as he offers countless gems. I chose the three above because I believe they speak to the current real estate market we are in.
You can chose to sit on the sidelines and wait? Or You can get distracted by price and forget value? Another option is to count on quick flips which can burn you? I am going to keep buying long term holds at great values and I know that America/Real Estate will be back on top once the cycle turns.
Photo: Michael Reuter