Warren Buffett’s New Advice For Commercial Real Estate Investors
Berkshire Hathaway’s 2013 results are out, along with the legendary investor’s annual shareholder letter. So what lessons are to be found in the new data for commercial real estate investing in Canada?
There are at least 6 important takeaways from the latest Berkshire reports for investors:
Even for a multi-billion dollar investment powerhouse like Berkshire, diversification remains critical for consistent returns and income. It’s been seen in the number of different ventures the firm has invested in and the investment strategies that have been deployed.
2) Partner Up
Berkshire Hathaway spent billions on acquiring Heinz in 2013. What was most notable about this deal was what Buffett calls “the creation of a new template in partnering up” with other investors and private equity. This may be a new model we increasingly see being used in commercial real estate.
3) Invest in Canada
Warren’s big bet on Suncor is hardly a secret. Yet, it is a positive sign of bullishness for the future of Canada, and specifically Alberta.
4) Go Long
Without a doubt Berkshire Hathaway is all about investing for the long run. This can be seen in the acquisitions and investments in what are called “century businesses”, and the way new investments are evaluated. What has really caught the attention of the media and industry analysts is Buffett’s comments on ignoring the media’s daily positions about asset values and to invest for the longer term.
5) Prioritize Income
“The Sage of Omaha” continues to prioritize income generation above anything else. Although he is known for value investing, he states that “values, especially future values, shouldn’t be counted on”. Many of his best investment decisions have been based on the income they produce.
Warren Buffett points to a single book that he claims was responsible for changing his financial life. So today’s Canadian commercial real estate investors would be wise to keep reading books, blogs and articles pertaining to the Canadian markets. You never know what nuggets will be life and wealth changing, for the better.
These are just a few takeaways from one of the greatest investors in the world. Although no one can predict the future, a few strategic decisions can help position savvy investors for the possibility of consistent income and capital growth for the years ahead.