Each day I spend a minimum of 1 hour searching blogs, articles and real estate websites to stay abreast of our real estate market and for continuing education. Recently, I came across an article written by Doug Smith, President of My House Deals. I found it “spot on” and wanted to share as I answer question #5—Is real estate a good investment today?
The article’s purpose is to share guidance from one of the wealthiest men in America, Warren Buffett. See below for Mr. Smith’s translation of 10 (13 in original article) of Warren Buffett’s most famous quotes. And beneath each quote, he translated it into practical advice for real estate investors-and why today is a GREAT time to buy real estate.
10 QUOTES FROM WARREN BUFFETT (TRANSLATED)
1. “Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.”
Translation: Today’s market fluctuations are your friend because they’ve scared off your competition … other investors. They’re also your friend because the fluctuations have caused there to be a flood of motivated sellers. And as any savvy real estate investor knows, buying from motivated sellers is the only way to make it in this business.
2. “Only when the tide goes out do you discover who’s been swimming naked.”
Translation: Keep plenty of tools (investing techniques) in your tool belt so that you can adapt to a changing market. What worked best in 2005 doesn’t work best in 2011. Today, we’re seeing first hand that those with only one investing strategy are taking a beating.
3. “Our favorite holding period is forever.”
Translation: To build true long-term wealth, you must buy and hold properties.
4. “Risk comes from not knowing what you’re doing.”
Translation: Those who don’t know how to properly enter and exit real estate transactions think today’s market is risky. Those who fully understand the intricacies of creative real estate investing continue to participate and profit.
5. “I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.”
Translation: Now’s the time to buy. In real estate and in life, it’s almost always best to act opposite to the crowd.
6. “Wide diversification is only required when investors do not understand what they are doing.”
Translation: Naive real estate investors are putting their money into stocks, bonds, and savings accounts right now. Smart investors continue to invest in real estate, and they’re picking up more bargains than ever.
7. “Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results.”
Translation: If you’re concerned that you cannot sell for full value, then buy lower – at about 60% of value – and sell lower – at about 90% of value.
8. “We will reject interesting opportunities rather than over-leverage our balance sheet.”
Translation: Sometimes the best real estate deals are the ones you don’t make.
9. “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
Translation: If you’re going to hold a property long term, it’s far better to buy a wonderful house at a fair price than a dump at a bargain.
10. “I really like my life. I’ve arranged my life so that I can do what I want.”
Translation: Remember, that’s what real estate investing is all about. Arranging your life so that you can do what you want to do when you want to do it.
Wishing you great Financial Succe$$,
BILL
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