[Podcast] Why not invest like Warren Buffett? (Summer Series)

What would Warren Buffett say about how I approach my property investing?

And why do I even care?

Well… Buffett who is 90 years old is consistently ranked amongst the world’s richest people, is arguably the most successful investor of the 20th century and has an estimated net worth of $107 Billion.

This means, he’s earned (on average) over $11 million each and every year of his life, which is thousands of times more than the average worker in Australia earns.

Anyway… I think he’d be impressed with how I invest because there are some similarities in our investment philosophies.

So in today’s show, I’d like to look at some of Buffett’s investment principles and see how we can apply them to our property investing.

How does Warren Buffet Invest?

Warren Buffett is arguably the greatest investor of all time.

So today I’d like to look at some of his investment principles and see how we can apply them to our property investing.

1. Adhere to a proven strategy

In my mind, you need to follow a strategy that has always worked, rather than one that works now.

2. Invest counter-cyclically

Buffett has advised: “We attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

This is also the investment strategy of many successful property investors and has proven to be a winning formula for many who invested in property.

3. Sometimes it’s best to do nothing

A great quote from Warren Buffett is…

“The trick is, when there is nothing to do - do nothing.”

There are stages in the property cycle and times in your investment journey when it is best to sit back and wait for the right opportunities.

4. Specialize - don’t diversify

Successful investors specialize. They become an expert in one area or niche and reproduce the same thing over and over again getting great results.

5. Invest for value

You make your money when you buy your property, but not by buying a bargain. Instead, you lock in your profits by buying the right property.

6. Invest for the long term

Those who have created wealth out of property took a long-term view. This doesn’t mean buy and forget - you should regularly review your property portfolio.

7. Don’t invest in anything you don’t understand

Warren Buffett never invests in anything he doesn’t understand – nor should you.

8. Manage your risks 

Smart investors have financial buffers in their offset accounts or lines of credit to not only cover their negative gearing shortfall but to see them through the downtimes of the property cycle.

What would Warren Buffett say about how I approach property investing?

I think he’d be impressed with how I invest because there are some similarities in our investment philosophies.

Clearly, I’m not in Warren Buffett’s league as an investor and Buffett much prefers investing in companies than buying real estate.

And of course, he really wouldn’t bother himself with how I do things, so all this is hypothetical.

Having said that, I’ve grown a very substantial property portfolio over the last almost 50 years of investing which has given me financial freedom and choices in life.

Resources:

Michael Yardney

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Some of our favourite quotes from the show:

“You can’t just go buy any property and hope it’s an investment-grade property.” – Michael Yardney

“It’s much harder to diversify when properties are so expensive.” – Michael Yardney

“Abundance of supply is the enemy of capital growth.” – Michael Yardney

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