Self-made billionaire, Warren Buffet tips about knowing a thing or two when it comes to buying real estate. In fact, Buffett strongly advocates that a home can be one of the most valuable assets a person can obtain. This is especially true if they plan to stay in the same area for a number of years.
Are you looking to get on the real estate ladder? Do you want to more about the market? If so, you’ve come to the right place.
Read on to check out the five best Warren Buffet tips.
1. Take advantage of a 30-year mortgage
Buffet took out a 30-year mortgage back in 1971 when he bought his vacation home in Laguna Beach, California for $150,000. He recently listed the property for $11 million. Who says you can’t make a similar profit?
The 86-year old who is currently worth $77 billion told CNBC that the 30-year mortgage is “the best instrument in the world.” He said in that same article:
“If you’re wrong and rates go to 2%, which I don’t think they will, you pay it off. It’s a one-way renegotiation. It is an incredibly attractive instrument for the homeowner and you’ve got a one-way bet.”
2. Realize that you don’t need to be a real estate expert to achieve satisfactory investment returns
You need to be able to recognize an investment opportunity when one comes along — it’s that simple.
Invest outside of the home market if you can. Try to partner with experts to ensure an even more successful investment.
For example, in additional to his private home portfolio, Buffet has invested in farmland and retail buildings.
3. Focus on the future productivity of the asset
One of the best Warren Buffet tips would be to place emphasis on the future productivity of an asset, instead of the prospective price change of a contemplated purchase.
Cash flow is more important than the residual sales price forecast.
4. Be realistic
Buffet believes that when dream homes are bought for ever-increasing prices using rapidly adjusting mortgage payments and unsustainable monthly costs, the American dream of home ownership can quickly begin to disintegrate.
Ensure your eyes aren’t bigger than your wallet! Go for the house you can afford. Don’t get seduced by the house of your dreams. If you have patience, you’ll reap the benefits eventually.
5. Remember 3 key Warren Buffet tips
Keep the following in mind: fixed mortgage, affordable payments, and long-term hold.
In the stock world, Buffett has been quoted as advising investors to “only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
Heed this advice.
Unsurprisingly, Buffett’s philosophy on investing in various companies echoes the one he applies to real estate investment.
Hunt for investments that produce income and have long-term value prospects not currently recognized or appreciated by today’s market.
Once you purchase them, increase their operational and managerial capabilities to maximize recurring revenue.
These Warren Buffett tips are concepts that you don’t need to be a billionaire to grasp. You can put them into practice in your own real estate portfolio.