6 Tips From Buffett For Real Estate Wholesalers
The newest annual shareholder letter from the legendary investor offers some great reminders and tips for real estate investors…
1. Diversify
Not even the great Sage of Omaha is immune to changes or making the odd ($2B) mistake. This makes it critical to stay diversified. Wholesalers might think this doesn’t apply since they are in and out of deals so quickly. Still, it pays to be diversified in different markets in terms of geography and price range and property type.
2. Keep Overhead Low
While Berkshire Hathaway’s network of businesses may employ over 300k employees it is all run and managed by a tight team of just 24 individuals which supervise the multi-billion dollar machine. Most real estate investors and wholesaling companies don’t need more overhead or large teams to breakthrough all of their financial goals.
3. On How to Evaluate a Deal…
Warren warns investors not to focus on macro figures or forecasts and suggests too much media can be damaging to success. Instead hone in on the individual deal.
4. Fundamental Investment Principles
While Buffett takes the time to remind shareholders of several core fundamentals his overwhelming focus remains on value investing and making your money when you buy.
5. Bet on American Prosperity
Warren admits he still has to step out in faith on deal now and again, but suggests no one has gone wrong betting on American prosperity in the last 237 years.
6. Real Estate
The legend is clearly more bullish on real estate than he has ever been. Building on Clayton Homes and his previous letter in which he called his home one of his best investments ever, this year he covers a farm investment he made as well as the huge push into real estate sales and profiting on transactional services, indicating he believes equally in profiting from buying and selling as holding.
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