Monday, November 11, 2013

Buffet's Birthday Present to the World: His Top Ten Investment Tips


Warren Buffet's Top Ten Investment Tips Applied to Real Estate


Warren Buffet loves to give tips to his followers and to others who will listen.  Last week CNBC and others posted a top ten list.  I thought it would be fun to apply these tips to real estate instead of businesses or stocks.


1.'It's far better to buy a wonderful home at a fair price than a fair home at a wonderful price.' 
Source: 1989 Letter to shareholders  insert company for home

2.'Rule No. 1: never lose money; rule No. 2: don't forget rule No. 1'
Source: "The Tao of Warren Buffett" (2006)  No change necessary

3.'Our approach is very much profiting from lack of change rather than from change. With Wrigley chewing gum, it's the lack of change that appeals to me. I don't think it is going to be hurt by the Internet. That's the kind of business I like.'   Just add: A 4 bedroom 3 bath home in a good neighborhood is always going to be a good bet.
Source: Businessweek (1999)

4.'I try to buy homes that are so wonderful that an idiot can make money from them. Because sooner or later, one will.'
Source: At a panel discussion after the premier of the documentary "I.O.U.S.A" (2008)  Substituted homes for companies and make money from for run.

5.'The real estate market is a no-called-strike game. You don't have to swing at everything – you can wait for your pitch.
Source: "The Tao of Warren Buffett" (2006)  Substituted real estate market for stock market

6.'Price is what you pay; value is what you get. Whether we're talking about socks or stocks or real estate, I like buying quality merchandise when it is marked down.'
Source: 2008 Letter to shareholders   I just added real estate
 
7.'Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results.'
Source: "Buffett: The Making of an American Capitalist" (1995)  No change necessary

8.'If you understood the real estate market perfectly and the future of the business, you would need very little in the way of a margin of safety.'
Source: 1997 Berkshire Hathaway annual meeting  Substituted real estate market for a business

9.'We've long felt that the only value of home price forecasters is to make fortune tellers look good. Even now, Charlie [Munger] and I continue to believe that short-term market forecasts are poison and should be kept locked up in a safe place, away from children and also from grown-ups who behave in the market like children.'
Source: 1992 letter to shareholders   Simply substituted home price for stock market

10.'We don't get paid for activity, just for being right. As to how long we'll wait, we'll wait indefinitely.'
Source: 1998 Berkshire Hathaway annual meeting   No change 

If you'd like to read the original list with commentary, go to http://www.cnbc.com/id/101000052

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