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Warren Buffett recommends buying single family homes

by Lloyd Buchinski
11 replies
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He suggests it's an investment worth more than the stock market. In fact he sounds a bit disappointed that he can't buy them all up and put managers in charge of them.

  • Profile picture of the author yukon
    Banned
    Hmmm..., doesn't Warren Buffett sell homeowners insurance & finance mortgages?

    He also owns Clayton Homes.

    If I owned a potato chip factory I would tell everyone the best you'll ever do is buy potato chips.
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    • Profile picture of the author Lloyd Buchinski
      That's funny Yukon, and probably a good point too. I'm so impressed with the guy and a lot of his quotes that I hadn't even thought that way.

      What a suspicious person

      But investing in potato chips, beer, pizza, and coffee all sound good to me too.
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    • Profile picture of the author MoneyMagnetMagnate
      Originally Posted by yukon View Post

      Hmmm..., doesn't Warren Buffett sell homeowners insurance & finance mortgages?

      He also owns Clayton Homes.

      If I owned a potato chip factory I would tell everyone the best you'll ever do is buy potato chips.
      Betcha' can't eat just one! :rolleyes:


      And...there really isn't anything stopping him from buying up all the houses and putting in Managers...isn't that just what the bank does when it gives you a loan? :p
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      • Profile picture of the author Kay King
        Buying home is a great idea is you have the money...and the knowledge to buy wisely.

        It's like the flipping advice in the past - flipping houses wasn't anything new and many who jumped on that bandwagon got burned badly.

        Buffet can afford to lose money - if you can't you shouldn't be risking it.
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      • Profile picture of the author yukon
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        What Buffett won't say on camera is, he could care less about the actual homes, it's that 30 years worth of interest rate & insurance he's banking on. The home itself is a money pit for any bank (Buffett) If a homeowner defaults on the loan.

        Buffett is in the banking business, not home buying business.

        It reminds me of McDonalds restaurants, the actual buildings are money pits (maintenance cost), it's the land/location that McDonalds builds on that is where the money is at, If/when they ever decide to sell. Ever notice how lots of McDonalds restaurants are built on corner lots in heavy traffic locations, they do that just like gas stations (resell value).

        If you look at that "Clayton Homes" link I posted above you'll see this:
        Clayton Homes also owns and operates 18 subdivisions.
        Clayton Homes is a manufactured home builder (mobile homes, modular homes), they own trailer parks (land) that create a monthly income. The trailers are a money pit (resell value), the land is where the money is at (resell value).

        Buying a mobile home by putting land up as a down payment is another old scam (IMO), people use their land as a down payment to qualify for buying a mobile home (common practice). A lot of mobile home buyers default on their loans so the bank gets the land (resell value). Remember Buffett sells mobile homes.

        Buffett is a sly old dog, he didn't put himself in that position from being a nice guy, he knows the life cycle of a product. If you buy a home you will buy homeowners insurance. If you buy a car you will buy auto insurance. Guess what, while your (anyone) buying a mobile/manufactured home, Buffett just happens to finance homes & sell homeowners insurance. He just profited 3 times from a single sale (selling a single manufactured home), not only that, two of the sales are recurring income (homeowners insurance, financing interest rate).

        Buffett will do anything/everything to get you to buy a home, so he can get that recurring income from you (upsell - homeowners insurance, financing interest rate).

        Watch what the gurus do, not what they recommend you do (usually not the same things).
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        • Profile picture of the author TimPhelan
          Seems like Buffett is just giving his opinion on what he considers a good investment. I really doubt he thinks he will make much money by going on CNBC and telling people that buying homes now, as compared to 5 or 6 years ago, is a good investment. That's not how he makes money. He isn't a salesman for his investments. That's kind of a silly thought really. The guy is 82, has cancer , has given billions away and plans to give 90% or so of his money to charity. He isn't that petty. He ain't Donald Trump.
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  • Profile picture of the author seasoned
    Yeah, DON'T TRUST buffet! I know enough about some of the stuff he does to know that a lot of things will ironically MAKE HIM RICHER! Besides, He doesn't live lavishly, and has a LOT of tax shelters!

    Anyway, homes can be expensive, and the prices are STILL historically high. So they CAN go down! And home sales slowed down BEFORE the latest admin, so a record shorter than that is NOT significant.

    Point of fact, MANY things in homes are set to break in an average of ten years! Within 8 years, my driveway showed wear. It is better than MANY there! Someone stole my freon, so that was like $500 right THERE! There is a scam set to be triggered about every 10 years for the next 20 years, AT LEAST, which can DRIVE UP HVAC costs! The latest one recently started. SO, if your A/C needs freon, it could range from EXPENSIVE to WORSE!!!!!! After abut 12 years, my W/C had to be replaced. The heater is borderline. Apparently the average life is about 15 years. After 10 years, the sump pump blew. After about 11 years,the garage trim had to be replaced.

    Average price for EACH repair? $1000! SO, you should save over $500 a year for future repairs! And don't forget that your base cost NOW is an average of TWICE the selling price!

    In OTHER words, a $200,000 home will cost about $415,000 And that is NOT taking into account the freon scam, and inflation! The freon one NOW could cost about an extra $12,000+!!!!!!! Potentially PER DECADE! Inflation could blow that $415,000 out of the water. And NEVER get an adjustable mortgage!

    Steve
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  • Profile picture of the author dutrowllc
    Definitely agree that its time to buy some homes.

    I just grabbed a SFH. 4.25% interest and 0% down and I can rent it out for more than my mortgage, upkeep, and property management costs.

    The ROI will be like 17% of something over a 30 year period because I had to put so little down.

    Can only get the 0% down deal once though cause I was a first time home buyer. Next time I'll have to pony up 20%.
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  • Profile picture of the author HeySal
    I'm seeing nothing spectacular about this advice - if you can afford it. I'd buy my own home if I could right now -- but it would be more land than house. If he wants to slip me a check, I'll do that right now.
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    • Profile picture of the author frankhill
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  • Profile picture of the author seasoned
    Buffet LOVES waste!!!!!!!! INSURANCE! CANDY! FAST FOOD! OTHERS waste money, HE MAKES IT! HECK, if the government DOES increase investment costs, as he is credited with......

    Dividend stocks will PLUMMET as an investment, and investors(INCLUDING poor seniors on FIXED INCOME) will LOSE MONEY!!!!!!!! Mutual funds, and investors in THEM, (INCLUDING poor seniors on FIXED INCOME) will LOSE MONEY!!!!!!! Many stocks will not have good track records, and PLUMMET!

    ONE investment that is NOT subject to current taxes, etc... and that rich people can sell virtually piecemeal? BERKSHIRE HATHAWAY! Is that a COINCIDENCE? New heirs will get companies and NEED MONEY BADLY! WB can buy them for a song! COINCIDENCE?

    Steve
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  • Profile picture of the author yukon
    Banned
    I don't have anything against Buffett, he's a smart business man (very focused).

    A lot of people try & replicate his success, but the one thing (the main thing, IMO) that buffet has in common each time he buys out a business is, he buys out business' that buy out the competition.

    As an example, look at "Clayton Homes", they bought out competition:
    • Clayton Homes
      • Schult Homes
      • Karsten Homes
      • Golden West Homes
      • Cavalier Homes
      • Crest Homes
      • Marlette Homes
      • SEhomes
      • Norris Homes
      • Giles Homes
      • Buccaneer Homes

    Warren Buffett buys the guys that buy out their competition.

    When you see one business buying up all the competition, it means the business is very aggressive in that niche & wants to dominate sales in that niche, which means long term profits. When you have a monopoly in a niche, the only option is higher profits (you own the competition).
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