Warren Buffet is known as one of the most intelligent investing minds of this century. He turned a paper route and a pinball machine business into an investing empire worth billions of dollars. He holds large pieces of some of the world’s largest companies, including the massive, market-shaking holding company Berkshire Hathaway.
Warren Buffet has become a living legend, an icon that investors live up to. Investors dream of having his acumen and savviness. His investments have been so lucrative that the SEC has awarded him special privileges to make private trades, because often just the rumor that he is going to buy or sell something will drastically affect a market.
For the most part, he follows the Benjamin Graham style of value investing. He believes that securities have an underlying value that isn’t always depicted in their price. By determining the true value of a stock based on its future earning potential, he can identify which ones are undervalued.
This “psychological mindset” to investing hadn’t existed before Graham and Buffet, but they have revolutionized how investors look at markets.
How does Warren Buffet’s style apply to real estate?
Buffet loves dividends. He likes collecting a check every year from the investment he owns and reinvesting that money right back into his investment plan. He lives a relatively simple life for an American so he can constantly increase the size of his investment. This is how he exploits compounded interest. Each year he’s worth more than the year before, by a factor greater than last year’s profit.
This works for the common investor as well. By living off your wages from your profession and reinvesting all of your real estate profits, your investment will grow exponentially.
As you earn monthly income from your real estate holdings, you can pour that money into more properties. By the time you are ready to retire, it’s possible you could own pieces of a dozen properties. Each property would bring in income to ensure a comfortable retirement.
Buffet doesn’t like too much portfolio turnover. He prefers to hold an investment as long as he can. If he made a strong decision in the beginning, that investment should continue to become more profitable. Buffet encourages investors to always think of themselves as part owner, even if they only own a little piece.
Real estate is the same. The longer you hold a piece of real estate, the more you’ll earn off that property and the more valuable it will usually be when it comes time to sell (which, hopefully, would be a long time after you made the initial purchase).
Written by Mark A. Mascia, President and CEO of Mascia Development
Mark manages the investment and operating activities of Mascia Development, a diversified value real estate investment firm that acquires, owns and manages retail, medical office, family offices, multi-family, and industrial real estate properties in the most promising long term growth areas nationwide. Through crowdfunding, they create powerful real estate opportunities for high net worth individuals.
A fully integrated real estate company, Mascia Development has in-house capabilities in acquisitions, financing, re-development, and construction; and their principals have experience in property and portfolio management, leasing, and maintenance.
Mark has a strong career in real estate, previously managing a property of portfolios valued over $1.1 billion. Mark has worked at Archstone-Smith (a former publicly traded REIT) and Monument Realty, one of the largest office real estate developers in the Washington, DC metro area. Mark teaches real estate development and finance at New York University.
For more information, visit www.masicadev.com.
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