For guidance on investing in troubled times, good times and unclear times - there’s no better person to turn to than Warren Buffet. I’ve taken 13 of his most famous quotes and listed them below. And beneath each quote, I’ve translated it into practical advice for real estate investors like you. Let’s get going…
You must ask yourself. Am I investing in a market? Or am I investing in a DEAL? If the deal is right and your exit strategy is clear, then the market conditions become much less relevant.
13 QUOTES FROM WARREN BUFFETT (TRANSLATED)
1. “Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.”
REI Translation: Today’s market fluctuations are your friend because they’ve scared off your competition … other investors. They’re also your friend because the fluctuations have caused there to be a flood of motivated sellers. And as any savvy investor knows, buying from motivated sellers is the only way to make it in this business.
2. “Only when the tide goes out do you discover who’s been swimming naked.”
REI Translation: Keep plenty of tools (investing techniques) in your tool belt so that you can adapt to a changing market. What worked best in 2006 doesn’t work best in today’s market. Today, we’re seeing first hand that those with only one investing strategy are taking a beating.
3. “Our favorite holding period is forever.”
REI Translation: To build true long-term wealth, you must buy and hold properties.
4. “Risk comes from not knowing what you’re doing.”
REI Translation: Those who don’t know how to properly analyze, enter, and exit real estate transactions think today’s market is risky. Those who fully understand the intricacies of creative real estate investing continue to participate and profit.
5. “I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.”
REI Translation: Now’s the time to buy. In real estate and in life, it’s almost always best to act opposite to the herd.
6. “Wide diversification is only required when investors do not understand what they are doing.”
REI Translation: Naive people are putting their money into stocks, bonds, and savings accounts right now. Smart people continue to invest in real estate, and they’re picking up more bargains than ever.
7. “Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results.”
REI Translation: If you’re concerned that you cannot sell for full value, then buy lower – at about 60% of value – and sell lower – at about 90% of value.
8. “We will reject interesting opportunities rather than over-leverage our balance sheet.”
REI Translation: Sometimes the best real estate deals are the ones you don’t make.
9. “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
REI Translation: If you’re going to hold a property long term, it’s far better to buy a wonderful house at a fair price than a dump at a bargain.
10. “A public-opinion poll is no substitute for thought.”
REI Translation: Most Americans think that now is a risky time to get into real estate investing. Do they know more than you? Most likely not. Only a handful of Americans know the specific techniques for profiting in today’s market. And that’s because they read articles like this, they buy real estate investment courses, they attend their local real estate investor meetings, etc. Most Americans get their “investing tips” from the daily paper. There couldn’t be a worse source. Do you think journalists know how to wholesale houses, do short sales, take over a loan Subject 2, etc.? I think not.
11. “The most important quality for an investor is temperament, not intellect… You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.”
REI Translation: Don’t worry what the masses are doing. Follow the advice of successful real estate investors, and use their techniques to profit in today’s market.
12. “You ought to be able to explain why you’re taking the job you’re taking, why you’re making the investment you’re making, or whatever it may be. And if it can’t stand applying pencil to paper, you’d better think it through some more. And if you can’t write an intelligent answer to those questions, don’t do it.”
REI Translation: Every deal must work on paper before it will ever work in real life.
13. “I really like my life. I’ve arranged my life so that I can do what I want.”
REI Translation: Remember, that’s what real estate investing is all about. Arranging your life so that you can do what you want to do when you want to do it.