A contact just sent me this link to an excerpt from Warren Buffett’s most recent Berkshire Hathaway shareholder letter.
Buffett’s approach is pretty much exactly how I think about multifamily real estate in improving parts of LA:
- Pay a reasonable price, such that the yield in year 1 is acceptable
- Don’t put yourself in a position where you might be a forced seller (so, don’t over-lever)
- Manage for yield
- Ignore swings in market prices, except to buy more when prices get low
- Never sell
If you just do this, my guess is that you’ll end up very happy about your investment(s).
Oh, and if you are interested in investing, you should 100%, absolutely, no question read Buffett’s collected shareholder letters, which are available as a collection on Kindle.
(Hat tip to EZ for the link!)