Warren Buffett Methodology Applied to Real Estate Investing

By Bruce Firestone | Uncategorized

Jan 15

The real estate investment coaching Bruce M Firestone, PhD, and his team does is based on the following adaptation of some of the strategies that Warren
Buffett has brought to stock market investing:

1.     Buy targeted smart, well-located properties in industry sectors where large, low cost-of-funds players
(banks, REITs, insurance companies, pension funds) are largely absent and in
places where the local economy has diverse and stable engines of growth (eg,
government, education, health, real estate and construction, tech, tourism,
industry, services, maker, retail and entertainment sectors)

“Don’t wait to buy real estate.
Buy real estate and wait,” Will Rogers,

2.     Buy and hold… longterm; ignore market cycles; do not flip or
you will flip ‘til you flop

3.     Only buy when your
heart, gut instincts and head are all in alignment (ie, you are passionate
about it, you have a good “feeling” about it, and your analysis shows it’s a good investment)

“Every person who invests in
well-selected real estate in a growing section of a prosperous community adopts
the surest and safest method of becoming independent, for real estate is the
basis of wealth,” Theodore Roosevelt, US president

4.     Once you have decided on
a sector you know and understand, and a business model that works, do three
things—FOCUS, FOCUS, FOCUS on it—the most successful entrepreneurs (not just in
real estate but in every field this is true) are those who do ONE thing really,
really well and treat everything else they’d like to do as a hobby

5.     Real estate is a local
business, so local knowledge is essential—stick to at most one or two
geographies and try to cluster your investments in close geographical proximity
to each other

6.     KISS—keep your ownership
structure as simple as possible (but no simpler) using personal names where

7.     In the beginning, use
maximum OPM[1], leverage and other

8.     Avoid partners, use debt

9.     Distinguish between good
debt (mortgage debt, secured debt) and bad debt (unsecured, personal debt)

10.  Raise bootstrap capital
(government grants, scrip, strategic investment, supplier credit, sponsorship,
self-directed RRSP mortgages, signage, SBL[2])
to leverage your investment

“Buying real estate is not only
the best way, the quickest way, the safest way, but the only way to become wealthy,”
Marshall Field, department store owner

11.  Determine the HABU
(highest and best use) for each property and develop/renovate/add to that level as well as analyze each property
using a spreadsheet to determine its IRR (internal rate of return) and cap rate

12.  Treat even your
principal residence as a rental so it becomes an asset not a liability

13.  Add value and
differentiation—animate your portfolio to increase cap rates through design/renovation/addition
including things such as in-home suites, coach houses, tech packages, home
automation, workshops, storage sheds, proper leasing, micro suites, direct
access to the outside, severances and much more… to boost cap rates 

14.  Manage your properties
well—eg, no deferred maintenance

15.  Before you refinance, get a CMA (comparative
market analysis) done professionally to support a decent appraisal then share
it with your appraiser beforehand—if he or she refuses to look at your CMA,
fire them and get someone else because if you get a low appraisal, it can
quickly become a cashflow problem for you

16.  Refinance and pull out
funds tax free

17.  Rinse and repeat—it’s
the only real perpetual motion machine in the known universe

“If you’re not going to put
money in real estate, where else?”
Sapir, Manhattan real estate investor

18.  At some point stop
buying and use your cashflow to increase amortization so you can pay off all
your debt faster

19.  Once your mortgages are
paid off, never pledge your portfolio for anything else—it’s your “iron
reserve,” a PB4L, treat it as such

20.  Pass on your portfolio
efficiently and effectively to your heirs using joint titles.

“Now, one thing I tell
everyone is learn about real estate. Repeat after me: real estate provides the
highest returns, the greatest values and the least risk,” Armstrong Williams,
political talk show host

Here is
Prof Bruce live at eSax in January 2017, https://youtu.be/Ou6kkIJM30k

-Do you want to learn how
to build a PB4L, personal business for life, one with a business model that
ensures the harder you work, the more money you will make?

“No one who can rise before dawn three hundred sixty
days a year fails to make his family rich,” Malcolm Gladwell

-Do you want to learn how
to build an above average real estate portfolio that’ll provide for you and
your family in perpetuity?

“Money isn’t everything, you know, but you can buy
freedom with it and freedom is everything,” Arian Foster.

– Do you want to learn
from someone who has actually been a successful developer, investor and real
estate broker as well as Ottawa Senators founder plus has a PhD in urban

– Are you tired of the
low returns you’ve been getting on your mutual funds, stocks, bonds, insurance,
401(k)s, GICs, t-bills, LIRAs, IRAs, IPPs, TFSAs, RRSPs, precious metals, gold,
and bank savings account?

“Real estate investment coaching with Bruce Firestone
has been a great experience. When I first came to Bruce, I explained to him our
current situation and that I was looking to expand my real estate portfolio. At
that time, I was basically out of ideas—my wife and I had purchased triplex in
Little Italy
and it was doing ok, but I thought we could be doing better. I thought it was
probably time to move on to a new investment but Prof Bruce opened my eyes to a
new concept—one he calls “animation.” Instead of immediately moving on to a new
property, we examined my current rental property. How could we animate it? We
looked at various options. In the end we ended up converting two of the three
units into Airbnb suites. We’ve now increased our cash low from that property
by a factor of 10!” Dave B, technology worker, real estate investor

– Do you want to learn
how to get deals properly financed and closed?

– Do you want to know how
to find investors and cash to help you fund your dreams?

– Do you want to know the
secrets to getting higher returns via real estate investing?

“I realize now that it was my fear holding me back
and I’m glad that Prof Bruce helped me push through all that fear, because it
has been a great learning experience. I can’t imagine my life without having
bought my first investment property… I would probably still be hoping and
dreaming to do what I’m doing now. It was a very important lesson to me, that
you’ve just got to push through, no matter what could be on the other side,”
Paul C, former public servant, engineer and novice real estate investor

– Do you want to find a
great piece of real estate for your enterprise, one you can own not rent,
animate and profit from?

– Do you want to find a
great location for your tech company, your service business, your
organization/not-for-profit/charity and not get taken advantage of by your

– Do you want to learn
how to buy smart, hold and grow rich using Warren Buffett’s philosophy of
tax-free refinancing?

“Wow, I was just able to explain everything about a
complex multi-residential deal I’m working on to an overseas buyer. Prof Bruce,
I can’t believe how much I’ve grown thanks to you!” Roman Monaenkov, Keller
Williams – Lifestyle Realty Team

[1] Other
people’s money.

Government-guaranteed small business loans.

For more info:

Bruce M Firestone, PhD



Real Estate Investment coach

ROYAL LePAGE Performance Realty broker

Ottawa Senators founder

Spread The Word

About the Author

Bruce is an entrepreneur/real estate broker/developer/coach/urban guru/keynote speaker/Sens founder/novelist/columnist/peerless husband/dad.