Warren Buffet Wants YOU…
…to buy real estate now!
Warren Buffet, a talented investor and the third-richest man in the world, sees a real estate boom in the near future for the United States. In a recent interview with CNBC, Buffet said of real estate, “It’s a very attractive asset class.”
Billionaire Buffet gives the most direct personal endorsement possible for investing in real estate. “If I had a way of buying a couple thousand single family homes, I would load up on them, and I would take out mortgages at very, very low rates,” he said. “It’s a way, in effect, to short the dollar, because you can take a 30-year mortgage, and if it turns out your interest rate’s too high you refinance next week, and if it turns out it’s too low, the other guy’s stuck with it for 30 years.”
When asked if he was a young investor with the choice of investing in stocks or real estate, Buffet replied, “If I thought I was going to live the next 5 or 10 years, I would buy a home and I would finance it with a 30-year mortgage.”
Plenty of reasons to buy
Acknowledging the impending recovery of the U.S. housing market, Buffet said, “Five years ago, people were buying like crazy because housing was going up. Now no one wants to buy because they’re afraid it’s going to go down.” It’s easy to see the message here: Don’t wait any longer to start buying property.
Aside from Buffet’s forecast, there are other factors contributing to a ripe market. Huge inventories caused by massive foreclosures, combined with low interest rates, are poised to generate big profits for the smart investor.
There’s also the fact that the current real estate market can deliver great deals to individual investors. With a lack of big corporate investors picking up single-family homes—they’re all busy grabbing rental units and apartment buildings—there’s no competition for distressed homes at slashed prices.
Considering the price-to-rent ratio
The price-to-rent ratio is another good indicator of the real estate market conditions. This number compares the costs of home ownership with the costs of renting within the same geographical area—and the lower the ratio, the better the option to buy.
Right now, the price-to-rent ratio has fallen from a peak of around 24 during the 2008 real estate crash, to its current score at around 16—the lowest it’s been since 2004. And this ratio is still headed down.
The bottom line for investors
Now is the time to get in on undervalued, single-family homes. According to Buffet, “It’s a leveraged way of owning a very cheap asset now, and I think that’s probably as attractive an investment as you can make.”
Home prices are incredibly affordable, and mortgage rates are at an all-time low. Investors who grab this property while it’s cheap will see incredible returns in the near future. In fact, Cleveland has the best price-to-rent ratio in the United States!
Contact NexGen Invest to help you take advantage of great deals in a prime market.