Warren Buffett’s Best Asset Class: Single Family Homes

While most of us don’t play in the same league as Mr. Buffett. Investors worldwide try to mimmick his strategies in hopes of achieving even a fraction of his success. So, when Buffett hands out free investment tips, the world takes note.

Recently in a TV interview, Buffett surprised those who have been bearish on real estate. He said: “If I had a way of buying a couple hundred thousand single-family homes and a way of managing them, I would load up on them.” (See video interview below)

Too bad Mr. Buffett doesn’t know about Tandem Uehling! We could certainly introduce him to the best providers of turn-key rental homes in the country, and point him to experienced property managers in those areas.
Most of us normal folks would be happy with a dozen or so rental homes, which would provide a steady retirement income and would be much easier to manage than a few hundred thousand. It must be tough for guys like Buffett who need a place to invest millions, and even billions of dollars at a time. Sometimes they have to pass on good deals simply because they are too small.

That’s why single-family home investing is best suited for individuals, and not hedge-fund managers. We are able to pay closer attention to our properties, which helps keep up the quality of the neighborhoods, bring in the best tenants and stay on top of the management.
Personally, I’m happy that this time around, Buffett isn’t suited to take his own advice. This is the time for the small-investor to get ahead. Thanks for leaving the good real estate deals for us, Warren! This is our playing field.

Buffett also added that if houses are bought at low rates and held for a sufficiently long period of time, single family homes perform even better than stocks. Of course, this is something we’ve been saying for years. It’s nice to finally hear it from a man whose net worth of around $50 billion is made up almost entirely of stocks.

His final bit of advice is for buyers to take out a 30-year mortgage and refinance if rates go down. I’m sure he envies the leverage available for home-buying that simply doesn’t exist in the stock market. Where else can you get a loan on an asset and pay less than 6% interest, take three decades to pay it off, and keep all the cash-flow and appreciation along the way?

Thanks for endorsing our industry, Mr. Buffett! Your wisdom will wake up the masses who have been so frozen by fear that they just can’t see a good deal, even when they’re living in it.

See the interview for yourself.