What property investors can learn from Warren Buffett?

There are few bigger names in the investing world, than Warren Buffett and while he might not be a property investor specifically, there is one thing in particular that we should listen to him about.

The thing that sets Buffett apart from many of his peers is not only his ability to find undervalued stocks but his willingness to invest for the long term. Buffett knows, that if he buys well and holds for a long period of time he will come out ahead.

He’s not worried about the ups and downs of the economy, and in reality, when things are bad, he’s more often than not going to be the one who is out there buying anything he can get his hands on.

When we take that perspective on investing over to the Australian property market, it staggers me when I see that people are not prepared to invest in the current market.

If you asked anyone 18 months ago, whether it was a good time to buy a property, the vast majority would have said it was. That was at a time when stock was scarce, demand was extremely high and people were paying prices well above price guides.

Fast forward to today and property prices have fallen back off their highs, sentiment has cooled dramatically, competition is down and demand has waned. Now most people are unsure of whether now is the right time to buy property and the cloudy economic outlook has made them nervous.

However, they might just be missing the perfect time to get into the market.

There’s no doubt it takes conviction and confidence to invest when the market slows down. But the way you get around this is by focusing on the actual asset you are trying to buy.

For me, I am only ever looking to invest in high-quality assets. That means blue chip property, in locations like the Eastern Suburbs of Sydney, North Shore, or Northern Beaches for example.

I do this because I know that in these areas, there is a fixed supply of land, strong demand from buyers who want to live in these areas and importantly high incomes to pay for the properties. This combination means that property in these areas will always see high demand and prices will continue to rise over the long term.

Now when times get tough economically, you can’t be all that certain about how property will perform in areas that don’t tick all of those boxes. Think about those regional areas and hotspots that shone during COVID. When reality hits, they might not continue to see the strong demand they once did. However, you can be sure that your Bondi investment property is still going to attract plenty of buyers.

So when the market cools down, that is your opportunity to be buying into these types of quality locations at a discount. Buffett likes to buy stocks when they are on sale and in the current market, prices have been on sale.

We can already see that prices are continuing to rebound as more and more people see that prices have now been on sale for 12 months.

If you invest in good assets, in good locations and plan to hold them for the long term like Buffett suggests, you really can’t go too far wrong.

If you are interested in the above, feel free to reach out to a Henderson buyers agent today for more information.

 

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