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Warren Buffett Why not real estate investment?


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WEB understands RE very well, but RE isn't always a bargain.  However, 10 years ago he bought many RE cos for his personal account.  Also, the stock tip in his wallet that was auctioned a few years ago was for a REIT.  A co that is about to be or in the process of being converted into a REIT is practically a sure thing to appreciate in price because the dividend rate will be much higher than the maximum possible rate before the conversion.

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Hello,

I was wondering why you guys think that Warren Buffett has never invested in REIT for berkshire hathaway to the best of my knowledge or even apartment complexes, hotels, office properties etc? thanks for the help.

Well, he did recommend FR at one point.

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I think I will change my question. Why do you think he has't included in his circle of competence real estate investment in general? Do you think there is something fundamental about real estate economics that he doesn't like?

 

LOL who said it wasnt in his circle of competence. The guy bought a farm  at like 14. He just doesnt like the price.

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I think I will change my question. Why do you think he has't included in his circle of competence real estate investment in general? Do you think there is something fundamental about real estate economics that he doesn't like?

 

I believe when asked about RE, Charlie Munger remarked that you only get adequate returns if you use large amounts of leverage.  So it might be the requirement of leverage that turns them off.

 

P.S. - Munger initially made his fortune in RE and his law firm, Munger Tolles and Olson, was originally formed as a law firm that specializes in real estate.  So it is well within their circles of competence.

 

This is actually what turned me off from RE. You really dont earn much without the 5x - 9x leverage.

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Guest Bronco

Can you imagine Warren Buffett, with all that he does, spending additional time looking at real estate deals, becoming Barry Sternlicht in his spare time?

 

The dude is awesome and all but I haven't seen a cape.

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