I am going to talk about an interesting means to take a look at real estate investing that may be a little bit unique to many building financiers.
A while ago, I viewed a video by Charlie Munger, who is popular as the business partner of Warren Buffet and also his well-known quote “Tell me where I’m gon na pass away and I’ll ensure I don’t go there.”.
In this video, Charlie that was 83 at the time, shared his life time of wisdom to make him a billionaire with a team of college grads that will begin their job.
There is one particular statement that actually passions me; he stated “You are not qualified to a point of view unless you can state the disagreements versus your viewpoint much better than your challengers can.”.
I find this statement quite extensive however very difficult to apply in real life, I assumed I would place it with a few of the opinions extensively circulated within realty financial investment and also see exactly how it goes.
Before I am entitled to a viewpoint of “exactly how valuable Charlie’s declaration is”, the counter disagreement of “just how worthless it is” can be something like the following:.
We are all entitled to our very own opinion concerning anything, despite whether it is right or wrong, it doesn’t actually matter what other individuals state.
Often a viewpoint can be totally wrong, however still convenient in life. “The planet is flat and also still” is an example of this, entirely wrong, however workable! Would not it be extra convenient to assume that you are walking on a still and also flat surface than a revolving ball?
So for the rest of the write-up, allow me to concentrate on just how valuable I assume Charlie’s declaration can help us as real estate investors.
What I have done is, go back to take a look at some of the tenets of real estate investment that we have taken for given without examining the contrary disagreements, after that see if we can learn something from it, and more significantly see if we can uncover investment opportunities most people miss since they stop working to see the opposite of the story.
I discovered one of the most typical viewpoint concerning real estate investing is: Land increases in worth because of its restricted supply so get residential properties where land is of restricted supply!
If you look at the property efficiency in Australia given that 1996, top quality developed suburbs all share this land scarcity factor, they all do effectively according to this tenet. For instance, while developing price is increasing 3-4% a year monitoring CPI, the land value has boosted as long as 12-14% a year, which averages out a 10% growth for a property over the last 15 years.