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Real Estate Investment: Applying Warren Buffett's Approach

Warren Buffett learned one of his first lessons in investing when he was only 11 years old. He purchased three shares of stock at $38, which quickly dropped to $27 before gradually rising back to $40. Buffett sold the stock for a small profit when he was young. Later, that stock soared to $200 per share. He realized the value of patience in long-term investing after experiencing the regret of selling so quickly.

Warren Buffett learned to play the long game, and his investing strategy can be applied to other areas that many people overlook, such as real estate. Purchasing real estate is the most significant investment that the majority of people will ever make. It may be difficult to believe that paying such a high price and making monthly payments will ever be worthwhile, but with patience, it pays to make that long-term commitment. Learn from one of the world's most successful investors and change your perspective on how buying real estate (both personally and commercially) can affect your life and business.

1. Make Long Term Investments

"Nobody buys a farm based on whether they think it’s going to rain next year … they buy it because they think it’s a good investment over 10 or 20 years.”

Young people with only a few years of experience in business may find it less scary or confusing to focus on short-term gains, but long-term investments are the most profitable. Warren Buffett isn't concerned with getting in on the ground floor or waiting for the perfect time to invest; instead, he seeks solid, long-term investments such as real estate. Early on, Buffett learned the value of a long-term approach by observing his father, learning from his mistakes, and building on those experiences.

2. Worst Case, stay safe

“Only Buy something that you'd be perfectly happy to hold if the market shuts down for 10 years.”

Warren Buffett understands the importance of planning for the worst-case scenario when he has a long-term outlook. Covering your basic needs should always be included in that plan. A financial collapse can leave you with nothing, but if you invest in real estate, you will always have a place to live or work. Rent a building for $10,000 per month for two years and you'll be out a quarter-million dollars with nothing to show for it. If you buy and sell the same building after two years, even if you only break even, you will have recovered the two years' worth of payments. Not to mention the tax breaks that can save you tens of thousands of dollars.

3. Patience Brings Great Reward

“Someone’s sitting in the shade today because someone planted a tree a long time ago.”

Patience, a skill that requires little effort but goes a long way, is at the heart of Warren Buffett's investment strategy. Not everyone realizes how much money they can make simply by living in their home and paying their mortgage for years. A working-class retirement may be around $100,000, but if you buy a home for $100,000 and pay it off over 20 years, your net worth skyrockets because that $100,000 house is now worth more than $400,000, all thanks to a passive investment in real estate — your home.

At First Choice Properties, we understand the importance of making a long-term investment in real estate. Our team of experts is here to help you find the perfect place to rent or buy in Abu Dhabi. Contact us today for more information or head to our website for more information on rentals in Abu Dhabi.

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