Buffett and Real Estate

[arbitragr]

Hi all,

I'm curious about WEB in relation to his views on real estate/property/REITS.

Anybody have anything they could direct me to?

Despite his aversion to Real Estate, WEB has invested in REITs personally see Altucher's book. But he won't invest in real estate via BRK due to the tax disadvantage compared to other REITs. Charlie was involved real estate when he was younger, so I guess their aversion to real estate is genuine, at least via BRK seeing as though Charlie has at least some expertise in that area when he was a young lawyer.

 

The best I can find is this during the 2002 Annual Meeting:

 

  QUESTION: Regarding their views on real estate investing.

     

     BUFFETT: If I was proposing a real estate investment, Charlie would say

     no, no, no or a while and I'd judge how [strongly he feels]. Under most

     conditions, it's hard to find real estate that's mispriced. We all know

     what a Class A office building in Chicago represents. Occasionally there

     could be big opportunities -- it might be because of a lot of chaos in

     financing.

     MUNGER: We don't have any competitive advantage over others in the

     field... and tack on our tax liabilities... so by its nature, real estate

     tends to be a poor investment for people with our C-corporation tax

     structure. We spend very little time thinking about real estate and when

     we have gotten into it, it's usually been with so-so results.

 

We are in a period of "chaos in financing" right now and CRE tends to lag the economy. Go figure.

 

Cheers and thanks in advance.

[Rabbitisrich]

I usually see references to real estate in the Wesco or Berkshire Hathaway AGMs. In the 2007 Wesco meeting, or in a Caltech speech, Munger basically said that real estate valuation was a separate art, and that the industry relied upon leverage to produce good returns. He mentioned that he used to mortgage commercial property that he owned in order to juice his investment returns, but that the strategy did not translate to big money.

[Parsad]

I think you'll find more information regarding real estate if you look at stuff Munger was involved with.  I think "Damn Right" has some stories and so does "The Snowball".  That was Munger's primary idea on how to become financially independent until he met Buffett.  He continued investing in real estate, even after starting the Munger-Wheeler partnership and Berkshire.  He still dabbles to this day.  Cheers!