Warren Buffet’s 2012 Advice: Buy, Baby, Buy!

401kcalculator.org

A very interesting article in the International Business Times today highlights legendary investor Warren Buffet’s advice for real estate investors: Buy, Baby, Buy (especially single-family homes)!

In particular, single-family homes are incredibly undervalued right now and are one of the best investments that you can make — in Buffett’s opinion, a better investment than stocks.  Buffett says that if there were an easy way for him to manage hundreds of thousands of single-family homes, he would buy them up immediately.  The reason he doesn’t is that it’s easier to buy and sell stocks with a simple click of a mouse.  Good news for home investors, however, is that this means there is far less competition in the market for single-family homes than in stocks.  Meanwhile, large real estate investors tend to buy up apartment complexes, further reducing competition for single-family homes.

For smaller investors with ready cash, buying a single-family home is the best investment of 2012.  Investors can take advantage of historically low rates (mortgage rates hovering at a record low of 4%), making the lifetime cost of the loan MUCH lower than it would have been a few years ago.  Additionally, the price-to-rent ratio of single-family homes is the lowest it has been since 2004 — this means that you’re paying less for the house, and getting more returns in rent.  And rents will continue to go up as the market recovers.  Buying a couple of properties at “distressed” prices, fixing them up, and renting them, is another great idea.

As Realtors in Orange County, we’re seeing more interested investors getting into the market and multiple offers on properties.  2012 is the time to buy!  Let us know if you are thinking of investing and we can work out a strategy with you.

Read the full article at International Business Times.