Warren Buffett is well known as one of the world’s most successful investors. He releases a shareholder newsletter annually, sharing his wisdom on his investment strategies as well as insights on financial topics. We are fortunate enough that his most recent newsletter covers the most in demand investment in Australia: Real Estate. Here are his 5 rules for real estate investing:

  1. “You don’t need to be an expert in order to achieve satisfactory investment returns.” We’ve heard this countless times, but hearing it from the man himself says something. Formulate a strategy that works for you. A great tip: decline and move on when you are approached with promises of quick profits.
  2. “Focus on the future productivity of the asset you are considering.” Do not force yourself to understand the future earnings of your asset. Not everyone can estimate an investment possibility. Understand the potential of the asset rather than focusing too much on the numbers.
  3. “If you instead focus on the prospective price change of a contemplated purchase, you are speculating.” No one is able to speculate successfully – neither should you.
  4. “With my two small investments, I thought only of what the properties would produce and cared not at all about their daily valuations.” Focus on the market movements and do your research as often as you can. Do not decide based on just the numbers that are provided to you.
  5. “Forming macro opinions or listening to the macro or market predictions of others is a waste of time.” Mr. Buffett is not a big fan of market forecasts, and it is very dangerous to rely on those for your decisions. See things through with your own eyes.

Read more about this on the Property Observer website.