{"id":4692,"date":"2015-06-09T01:00:48","date_gmt":"2015-06-08T15:00:48","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=4692"},"modified":"2015-06-09T01:00:48","modified_gmt":"2015-06-08T15:00:48","slug":"how-would-warren-buffet-invest-in-property","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/how-would-warren-buffet-invest-in-property\/","title":{"rendered":"How would Warren Buffet invest in property? – Michael Yardney"},"content":{"rendered":"

 
\nThere is an old saying that success leaves clues, and there\u2019s no greater successful person in the world when it comes to investing than Warren Buffett. He\u2019s 84-years-old, he\u2019s consistently ranked amongst the world\u2019s richest people, so let\u2019s have a hypothetical look. If Warren Buffett were to become involved in investment in Australian property, what would he do? How would he go about it?
\nMichael Yardney<\/b><\/a>,\u00a0from Metropole Property Strategists, thinks he knows and he tells us today. Success leaves clues and there will be lots in this chat with Michael.
\n <\/p>\n

Transcript:<\/h4>\n

Kevin<\/b>:\u00a0 There is an old saying that success leaves clues, and there\u2019s no greater successful person in the world when it comes to investing than Warren Buffett. He\u2019s 84-years-old, he\u2019s consistently ranked amongst the world\u2019s richest people, so let\u2019s have a hypothetical look. If Warren Buffett were to become involved in investment in Australian property, what would he do? How would he go about it?
\nInteresting question. I\u2019m going to pose that of Michael Yardney from Metropole Property Strategists. Michael, I know this must be something you\u2019ve thought about, as well.
\nMichael<\/b>:\u00a0 It\u2019s a hypothetical question, and Warren Buffett clearly is one of my mentors. Nobody I\u2019ve met personally, but I\u2019ve followed his systems, I\u2019ve followed his strategies. I think he would invest a little bit like I do. I know that\u2019s being vain, but I\u2019d like to explain why, Kevin.
\nKevin<\/b>:\u00a0 Please do.
\nMichael<\/b>:\u00a0 Kevin, he has his own investment philosophy, which is very clearly defined. He tells people there\u2019s no secret. He has a set of strict selection criteria:<\/p>\n

    \n
  1. Rather than investing in the latest fad, he invests in tried-and-proven industries. That\u2019s why he didn\u2019t get burned in the tech wreck when everyone else did in the 2000s.<\/li>\n
  2. Warren Buffett understands the importance of timing and counter-cyclical investing. He knows that patience is important.<\/li>\n
  3. He doesn\u2019t buy cheap companies; he buys great companies with strong values and strong brands.<\/li>\n
  4. He buys companies cheaply, below their intrinsic value. He bought Gillette at a really good price. He bought Coca-Cola. He\u2019s buying good brands, blue-chip properties and blue-chip companies.<\/li>\n
  5. He buys companies with a strong upside potential.<\/li>\n
  6. He invests for the long term. Kevin, he says something along the lines of if you aren\u2019t willing to own a stock for ten years, don\u2019t even think about owning it for ten minutes.<\/li>\n<\/ol>\n

    Can you see some common threads there, Kevin?
    \nKevin<\/b>:\u00a0 Yes, I can. In fact, I\u2019ve listened to you on a number of occasions talk about your strategy, so let\u2019s apply what his investment philosophy is to Australian property.
    \nMichael<\/b>:\u00a0 This is, again, a hypothetical exercise, as you say, but I\u2019m guessing what he\u2019d do if he was to buy properties in Australia is he\u2019s likely to look for five things:<\/p>\n

      \n
    1. He\u2019d buy properties in areas with strong capital growth prospects.<\/li>\n
    2. He\u2019d buy properties that he can buy for less than true market value, just like he does with shares, because he only wants to buy with a margin of safety there.<\/li>\n
    3. He\u2019d buy properties that are unique, that are special, that are different, something that creates a level of scarcity. You\u2019ve heard me talk about the concept of property with a twist. Just like Buffett bought Coca-Cola because its brand makes it difficult for competitors to compete, you want to have something that makes your property stand out.<\/li>\n
    4. Kevin, I don\u2019t think he\u2019d chase the latest hot spot. He\u2019s not into fads.<\/li>\n
    5. He\u2019d also buy properties to hold in the long term and not consider trading or flipping.<\/li>\n<\/ol>\n

      Interestingly, there are some similarities between what Warren Buffett would probably do and what a lot of the successful people you have on Real Estate Talk do, Kevin.
      \nKevin<\/b>:\u00a0 Yes. One of the things that stands out, for me, Michael, is that he doesn\u2019t take a short-term view to it. You talked there about not flipping properties quickly, not looking for the latest hot spots, so therefore, not chasing the latest fads.
      \nMichael<\/b>:\u00a0 Right. Now, he also is a counter-cyclical investor, and that\u2019s definitely one of my philosophies also. But once you become a substantial investor like he does, he doesn\u2019t only wait for the counter-cyclical opportunities; what he actually waits for is the right opportunity, realizing that he makes his money not by buying a property or a share cheaply, but by buying the right ones.
      \nSome really good lessons there for property investors, Kevin.
      \nKevin<\/b>:\u00a0 One underlying lesson, Michael, is that you need to develop a strategy, and then you need to stick with it.
      \nMichael<\/b>:\u00a0 Can I finish with a good quote from Warren Buffett?
      \nKevin<\/b>:\u00a0 Please.
      \nMichael<\/b>:\u00a0 He said, \u201cI\u2019m a better investor because I\u2019m a businessman, and a better businessman because I\u2019m an investor.\u201d I think that shows that a strategic approach that property investors should take \u2013 as I\u2019ve often said \u2013 is treat your properties like a business.
      \nKevin<\/b>:\u00a0 Indeed. Wonderful talking to you, Michael.
      \nMichael Yardney from Metropole Property Strategists, a well-known author, of course, and you can follow him at his blog site, which is PropertyUpdate.com.au.
      \nMichael, thank you so much for your time.
      \nMichael<\/b>:\u00a0 My pleasure, Kevin.<\/p>\n","protected":false},"excerpt":{"rendered":"

        There is an old saying that success leaves clues, and there\u2019s no greater successful person in the world when it comes to investing than Warren Buffett. He\u2019s 84-years-old, he\u2019s consistently ranked amongst the world\u2019s richest people, so let\u2019s have a hypothetical look. If Warren…<\/p>\n","protected":false},"author":176692471,"featured_media":4696,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[10,13,25],"tags":[101],"class_list":["post-4692","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-kevin-turner-sponsored-channels","category-latest-story","category-sponsored-channels","tag-podcast"],"yoast_head":"\nHow would Warren Buffet invest in property? - Michael Yardney - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/how-would-warren-buffet-invest-in-property\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How would Warren Buffet invest in property? - Michael Yardney - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"  There is an old saying that success leaves clues, and there\u2019s no greater successful person in the world when it comes to investing than Warren Buffett. 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