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The greatest U.S. investor of all time is Warren Buffett—$1,000 invested in Berkshire Hathaway 60 years ago is now worth $60 million! As he prepares to retire after a legendary career, his legacy is that of a value investor with long-term investment horizons.
Buffett once said, “You don’t need a lot of brains to be in this business. What you do need is emotional stability. You have to be able to think independently.” He was often quoted emphasizing not to own a stock or company unless you would be happy owning it for 10-plus years.
Although there are many strategies here to profit from real estate, there is one investment element proven to yield the highest ROI: time. Applied to real estate investing, the duration of ownership is a lesson that can only be learned the long or hard way.
Trading vs. Investing: Real Estate Mindset
In my own real estate career, I have taken the latter route toward eventually establishing a healthy and happy real estate portfolio. I began with a speculative Florida land investment and SFR just before the crash in 2008 (both sold in the nick of time), and more recently in 2018 with an $85,000 SFR on the Oregon coast that was intended to be a long-term BNB and ended up being a profitable flip, but today is valued at double what it was sold for.
Between then and now, it was more of the same: a seller-carried lot partition and flip, tiny home conversion BNB and sale, and a primary home full of upgrades that, for several reasons, we had to sell—until eventually, we recovered with a fully paid-off STR casita in Mexico and a waterfront home on our favorite river in Oregon.
That’s a long way of getting to this thesis: Trading real estate and investing in real estate are two totally different approaches, with the primary variables being planning, tenacity, and resilience. The most successful real estate investors can identify and optimize unrealized (or future) potential in properties. Whether by improving operations and cash flow, development, or conversion, they execute, and perhaps more importantly, retain possession of ownership and allow for appreciation (from a low cost basis).
Learning the Hard Way: The Cost of Short-Term Vision
Think of the most successful real estate investors you know personally, such as the grandpa who bought on Lake Tahoe 40 years ago, the friend’s dad who owns the warehouses their business is located in, or the family who retained their Florida beach condo from the ‘80s. Their real estate asset story arc is usually one involving a “slow and steady” theme.
We certainly have proven our ambition, capability in renovation, design, and resourcefulness in acquiring real estate—except when it came to maximizing returns. Although each was “profitable” on paper—had we held even a majority of our properties—we would have at least a million-dollar RE portfolio before the age of 40.
Why didn’t it work out? Blame it on a lack of cohesiveness, long-term vision, and investments in locations on timelines that matched our lifestyle. Professional investors—effectively, individuals or corporations that raise capital—might have a different strategy, but for the majority of individual investors, maintaining a long-term commitment is the path of least resistance to a positive and meaningful wealth shift.
Every trade comes with expenses and inputs, not all of which are financially quantifiable. In several of my examples, I quite literally spent years DIYing the properties myself with zero construction experience, or even tools for that matter. Today, I can pour a slab, frame, run electrical, and do plumbing and finishings, but I cannot get my 30s back.
Cultivating Patience: The New, Long-Term Plan
With that said, I do consider my crash/cash course in blue-collar skills worthwhile. It cost me several years and equity, but I’m rapidly catching up and am much happier and better prepared to execute my refined long-term investment plans.
With what I learned “failing,” I could now build a house from scratch myself—and I plan to, once my current and most recent primary purchase is paid off. The goal is to eventually convert our seasonal home to an STR and contribute all proceeds toward accelerated satisfaction of the mortgage. Once it’s free and clear in 15-ish years (or sooner), I’ll either pay cash or take out a construction loan to build a more substantial custom dream home.
Since I was able to acquire the home with $2,700 out of pocket (more on that later), our total out-of-pocket contributions over the life of the loan will be incredibly marginal in comparison to the anticipated rate of appreciation and value of personal utilization.
The eventual STR rental income or cash flow would not make a meaningful difference in our income, but a free-and-clear riverfront cottage on acreage 20 minutes from Bandon Dunes Golf Resort in Oregon, with very strong redevelopment potential when we’re entering (early) retirement age, sure will.
Leveraging Lifestyle and Principal Paydown
I have another theory about STR investments: An underappreciated investment aspect is one where, within a 10-20-year period, a substantial portion of the principal can be satisfied, usually in an optimal location.
As importantly, we’re realizing our rural dream of homeownership now (when we have the energy) instead of saving it for retirement. In fact, our BNB in Mexico has allowed my fiancé to work considerably less at her day job and focus on herself and her interior design business. Granted, we’re sacrificing the immediate savings, but our businesses, assets, reputations, and freedom are growing as a result.
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What was the missing mindset that Buffet exemplifies? Patience. He famously said, “Someone is sitting in the shade today because someone planted a tree a long time ago.”
The Ultimate Investment Rule
There are many methods to trade real estate, but far fewer, or more proven profitable than prime assets over a long duration.
One of my mentors is a real estate attorney and manages a literal billion-dollar portfolio for some of the most recognizable developers in South Florida. Their advice to him was whether he should sell an asset unexpectedly. To sell only if and when it allows you a substantially greater or conducive opportunity that you can’t afford otherwise, and to think twice as hard about selling an asset as acquiring it.
A long-term real estate mindset is a smart investment strategy that enables investors to make (or not make) meaningful moves in any market.
