Real Estate in a Nutshell
One Piece of Advice We Like to Follow
“Don’t pass up something that’s attractive today because you hope
you’re going to find something way more attractive tomorrow.” – Warren Buffett
Two Favorite Books About Real Estate
- Be My Guest (by Conrad Hilton)
- The Art of the Deal (by Donald Trump)
Three Fundamental Ways to Profit from Real Estate
1 – Fundamentally Change What’s There (Turn cornfields into shopping malls / change zoning etc.)
2 – Buy and Sell Bargain Properties (Buy properties at least 30% below market and sell quickly)
3 – Buy and Hold High Cap Rates (Pay a fair price for a property that has abnormally high cashflow)
At Delta REP, we admit we are not geniuses and cannot tell the future. So we pass on #1 as it’s almost entirely speculative. We do however think long term, and feel that it’s just too stressful and taxing to constantly turn inventory over and always have to chase the next deal as is required for #2. Why put all that legwork into acquiring a property and only profit off of it one time? We like to pursue #3 and see a profit come in on a regular basis and set up a pipeline of sorts, or utilize a buy and hold forever strategy as Mr. Buffett puts it. We also take his advice and prefer buying wonderful properties at fair prices rather than fair properties at wonderful prices.
Four Primary Benefits of Owning Real Estate
1 – Price Appreciation
2 – Positive Cashflow
3 – Equity Through Amortization
4 – Tax Savings
Most people only think about price appreciation when it comes to investing in real estate. What can I buy it for now, and sell it for later is the mentality. Funny thing is, price appreciation is the one thing we completely ignore when buying a property because we have zero control about where prices could go in the future (not to mention we have no intention of selling anyways). The last three benefits are what we feel are the bread and butter of why anyone should want to get involved with real estate and are what we as investors have any bit of control over.
Five Top Reasons Why We Love Real Estate as an Investment
1 – Inefficient Markets
2 – Inflation Hedge
3 – More Control
4 – Higher Returns
5 – Simple and Easy to Understand
