Buffett is how to copy the real estate investment?
shoujitengxunwangcai· 2016-05-07 09:11:35
Chen Kaifeng sums up Buffett's investment in real estate. Including agricultural land, commercial real estate, real estate investment trust fund once. Buffett and another from the housing and a vacation home, holiday house was sold. Chen Kaifeng summed up the Buffett real estate investment style: every time in the crash or the housing market after the collapse of the buy, and always hold, not sold. < p > Dr. Chen Kaifeng, New York Financial Forum NYFF joint promoters, currently in New York management a global macro hedge fund. At the same time in the University of New York, New York at Pace University, Barcelona, Spain's IESE business school in central New York taught, and served as New York University, Dean of the College of professional part-time Advisory Committee. Dr. Chen is a member of the Economic Club of New York, members of the foreign policy association, University of Colorado JPMorgan Commodity Research Center Global Commodity Research magazine editorial board. < p >, the following author Chen Kaifeng < each year by the end of April, early May a Saturday, more than 40000 people will come to a city in the central United States Omaha from all over the world. Omaha city is located in the central United States of Nebraska, has a population of about 450 thousand. Suddenly within a few days the population increased by 10%, which is a huge impact on Omaha. Of course, the reason for them to go to Omaha is the annual meeting of Buffett's Berkhire Hathaway Inc. Buffett's annual meeting is called the Woodstock Carnival of capitalism, I feel a lot of harvest every time. This year's fifty-first session of the shareholders' meeting, there are Berkshire shareholders to ask Buffett of real estate investment, in particular his personal account last year to buy a real estate investment trust of the United states. After the meeting, according to Berkshire Hathaway's annual report, as well as Buffett's other public speech, the author of Ba Lao's real estate investment.
1. Buffett's personal real estate
said real estate, Buffett I have repeatedly said that the real estate investment is not interested. Very famous is that Ba Lao has been living in the house he bought in 1958. The house he bought at the time was $31 thousand and 500. The house is currently valued at $700 thousand. Nearly 60 years of holding period, the appreciation of about 23 times. The house is 5 bedrooms, with a basement, with a total area of 3800 square feet (about 380 square meters). The United States in the past 60 years of inflation rate calculation, the house of the purchase price equivalent to $is about $250 million. It can be said that Buffett's home real estate appreciation of about 2% higher than the U.S. inflation rate, basically the United States long-term real estate investment rate of return. After deducting his years of real estate taxes and maintenance costs, the house should be to maintain a long-term value. < p > as a digression, Buffett has often and his ex-wife to northern California Vacation, every time is to lease a house, many years later, he bought the house, to his wife live. The four bedroom house, with an area of about 3100 square feet. After his wife's death, Buffett sold for $four million and three hundred thousand. In addition to the two real estate, one is his home, one is his vacation home, and later sold, Buffett did not have any other personal real estate.
Buffett's Berkshire Hathaway is also influenced by his culture, without his own office. The market value of $350 billion, $about 200000000000 a year of revenue, the headquarters staff a total of 23. Rent the office building in the very humble Kiewit inside the building, and there is no sign of berkshire.
2. Buffett's agricultural land investment
Buffett, although not like investment in real estate, he is still closely watching the real estate market trend. According to Buffett's own memories, in the Midwest from 1973 to 1981 there was a huge increase in agricultural land. At that time, the background of the United States is runaway inflation, while a large number of rural small and medium-sized banks on the farmers' loans over, this round of agricultural land rose last reached the height of the bubble, and then collapse. At that time farm land prices fell by an average of 50%. Due to the collapse of land prices, leading to a large number of small and medium-sized banks. < p > farm land prices after the collapse, Buffett to intervene in 1986, hunters bought 400 acres of land, purchase price is $28 million. One of Buffett's son, Howard, who was fond of playing excavator toys, grew up to be a farmer. So Buffett gave the farm to his son. He was calculated, taking into account the various kinds of farm inputs, decided his son to his annual rent is 22% of the farm output of grain harvest. According to his son's description, basically a year to pay the rent and other costs, his son's income is very small, and even in some years will lose money.
Buffett's farm has been held until now, he estimates the past 30 years, due to the low buy, plus the annual crop yield, the total annual yield of 10%. This yield should be more than the same period of the U.S. stock index and bond index. Of course, Buffett most stressed that he bought the farm price is after 50% after the fall of the price, the value continues to downside risk is very limited. The farm is now run by Buffett's eldest son.
3. Buffett's commercial real estate investment
Buffett mentioned in his interview that he was the only direct commercial real estate investment in New York. At that time was in 1993, New York's commercial real estate market has just experienced a crash. Due to a large number of bank loans to the real estate development company, after the collapse of the real estate prices, a large number of financial institutions in the United States bankruptcy. At the same time, there are a lot of headquarters in Manhattan, New York, the company moved out of the city center. In this case, the United States government has set up a collection of bankrupt banks of bad assets of the company RTC, and then continue to cash these assets. Buffett after seeing this situation, the audit in the market to sell commercial real estate, and then determine a condition: must be a house near New York University.
Buffett's logic is that New York's real estate market collapsed, but the New York University is still. Other big company headquarters can move, but the New York University will not move away. He only hunters in the vicinity of the New York University real estate. The income from this investment is huge. Investment cash return on the year reached 35%, after the first 5 years of investment cash return reached 150%! Near New York University is now Cuntucunjin place. From then to now, may the annual rental income has substantially more than his investment more than doubled. More than and 20 years later, Buffett still holds a commercial real estate.
4. Buffett's real estate trust fund investment < p > in this year of the 51 Buffett general meeting of shareholders, Buffett and Munger two elderly people are still talking, from in the morning 9 point began more than six hours of continuous dialogue. In the afternoon, many investors have been listening to the exhaustion of the time, it was in the shareholders' seats to ask Buffett: your personal account of a real estate investment trust last year, a series of data? This problem is estimated to make Ba Lao somewhat surprised, because he is not used to investors questioned his personal account. After the author, according to his answer, check the relevant public information. Actually, Buffett in the third quarter of 2015 to buy housing Saileiteji real estate investment trust fund for 8% of the public offering of shares, with a total investment of about $100 million. Veteran of the United States Department Stores Sears spin off of the real estate trust is Saileiteji of real estate trust, it can be said to contain the Pearl of commercial land across the United States. The trust is about $1 billion 700 million a year, about 2% of the annual bonus. Buffett buy this real estate trust information released the same day, the trust price rose 17%. Over the past six months, the total return of the trust is about 30%. Buffett himself is very simple to explain this investment, he said that his 99% of the wealth in Berkshire's stock, the other 1% in his personal account is a small thing".
the author believes that this is not so simple. Buffett's wills wrote his account of personal assets left wife is going to have to do this investment: 90% in the standard S & P 500 Index Fund (preferred vanguard index funds), 10% in 1-3 year treasury. So, in the future, before the arrival of his real estate investment trust fund should still be considered a point of consideration. Especially in the second half of last year due to the fear of the fed to raise interest rates, real estate trust funds are falling sharply. Buffett's investment is basically the bottom of the real estate trust fund industry to buy.
sum up, Buffett investment real estate case very few, in addition to the three investment, plus owner occupied, he did not have any other real estate investment. However, the three investment, each time is in the crash, or after the crash to buy, and every time he is always held, not sold. Perhaps this approach is not necessarily suitable for all people, but this operation style is worth attention.
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