Real Estate Investment Advice From Billionaire Warren Buffet

When it comes to making a decision to purchase something let's be honest, unless we've established a relationship with someone it's unlikely we will rely on them 100% for business advice. 

Every single day I meet with great individuals who are considering getting into Real Estate as a way to diversify their portfolio. Many of them are long term investors in Stocks, Bonds, Mutual Funds etc.

The unknown can be terrifying territory to us. So for someone who hasn't yet begun investing in Real Estate it may take hearing from some top experts before they finally decide to "take the plunge."

Enter Warren Buffet. Billionaire investor. He's been labeled the most successful investor of the 20th century. Pretty impressive. In 2012 Time Magazine named Buffet one of the worlds most influential people. 

In an interview with CNBC, Buffet stated that he'd buy "A couple hundred thousand single family homes if he could." Well that interview took place in 2012 and now fast forward a few short years later and Mr. Buffet has been buying up investment properties all across America. 

In Buffet's annual letter to the shareholders of Berkshire Hathaway, Mr. Buffet offered up some of his best advice when it comes to purchasing investment properties. 

His first piece of advice? 

Invest in undervalued and distressed real estate. To be quite honest one of the reasons Alive Investments has grown to become of the most successful Real Estate Investment firms in Baltimore is because of just that. We are laser focused on selling undervalued and distressed Real Estate. Our team has become Ninja Rock Stars, yes I just said Ninja Rock Stars, it's a phrase trust me. Ninja Rock Stars when it comes to locating significantly undervalued and distressed Real Estate that holds significant value to an investor. 

Buffet's second piece of advice? 

Think in terms of income and not appreciation. "I only care about the income my properties are producing" said Buffet. "I don't care about the value because I can't predict value." 

When it comes to income producing properties Baltimore has become the mecca of this particular accolade. The other day a friend of mine reached out to me and wanted to share with me a really 'hot' investment deal he knew about in Orlando, FL. A new development was coming up and the properties were selling for 500k. "These homes will rent for almost $3,000 a month" he excitedly told me. My response: "You can spend under $90,000 here in Baltimore and make $3,000 a month." 

Warren Buffet is a wise man. Income producing properties are one of the best possible investments you can make. 

BUT, and there's always a but. There is a catch. And the catch is offered in Buffet's last piece of advice.

Use strategic partnerships to fill the gaps in your expertise. 

This is possibly one of the most important pieces to the puzzle. 

And this is perhaps the biggest hurdle for a new investor. "What do I do, and how do I do it?" is a question I get asked often. Although Real Estate Investing is one of the most profitable ventures you can be a part of, it's complicated. There are many moving parts, and if you don't know what you're doing you need to find someone who does. 

And this is where I think many people make a big mistake. There are courses out there that will teach you how to be a profitable Real Estate investor. The catch is they cost thousands and thousands of dollars. Personally I think this is a huge waste of money.  Instead partner with individuals and companies that you can strategically partner with to become successful. 

Now before I explain all that you need to make up your strategic team, let me start by saying that Alive Investments is all of these rolled into one.  I'm very proud to say that for years we have been the premier investment firm serving Baltimore and all of Maryland, as well as Washington, DC, Virginia, Delaware and Pennsylvania. We have some exciting expansions coming out in the near future that will branch us out into others parts of the country. 

So who do you need on your team? 

Well first off you need someone to locate quality properties for you. We typically call that person a wholesaler. 

Why is that so important? Regardless if your new or experienced in Real Estate Investing, locating the right properties are so crucial for your success. Here in Baltimore there are many variables that go into that. There are certain zip codes within Baltimore that we tend to focus on for locating properties. These particular areas over the years have brought the most return on investment for our clients. But knowing the zip codes isn't enough. In Baltimore it often depends on the block. One block can be beautiful with rows of nice homes, and the next block can be filled with board ups. So knowing both the right zip codes and the right blocks is very important. Also with the right wholesaler in place you can locate properties that are selling for 20-50% below market value. 

Next you need a good closing attorney. A Real Estate closing can be the most enjoyable experience or the worst headache of your life. You need to work with someone who is experienced and that is familiar with working with Real Estate Investors. 

Up to bat next is your rehabber or your contractor.  I hate to say that one piece of the puzzle is more crucial than another, but outside of finding the right property this may be next on the list of importance. Unfortunately over the years I've heard way too many horror stories of investors having horrible experiences with contractors. It's sadly something we see in this business. The contractor ran off with their money, the job wasn't finished, the job wasn't done right, the job took way too long. I could go on and on. Alive Investments has a team of licensed contractors that we've built a long standing relationship with over the years. I have the utmost confidence in their work. It's so crucial that you can say that about the contractor you are working with. 

Having a good insurance agent is another piece to the puzzle and last but certainly not least you need a Project Manager in place to oversee all of these pieces. 

As you can see it's complex, but the outcome is beautiful. We work with hundreds of investors that have literally made millions of dollars buying and selling Real Estate. It's a lucrative investment, but one that should not be taken lightly. You can attempt to work all these pieces yourself, or you can work with someone like Alive Investments that can do everything for you. 

Take it from someone like Warren Buffet, this is one of the most profitable and exciting investment opportunities you will ever encounter, and don't forget his advice: Find undervalued and distressed properties, focus on the income those properties will make for you not the appreciation, and find the right partners to make your venture a success. 

Happy Investing my friends !