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Real estate has long been a go-to asset for building wealth in America, offering income through rent and potential gains through appreciation. But according to investing legend Warren Buffett, there’s one asset class he — and his late business partner Charlie Munger — would take over property any day.
“There’s just so much more opportunity — at least in the United States — that presents itself in the security market than it does in real estate,” Buffett said at Berkshire Hathaway’s latest annual shareholders meeting, when asked why he isn’t buying more real estate.
Buffett pointed to the complexity and sluggishness of real estate deals compared to the ease and speed of stock transactions.
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“In respect to real estate, it’s so much harder than stocks in terms of negotiation of deals, time spent, the involvement of multiple parties in the ownership,” he said. “Usually when real estate gets in trouble, you find out you’re dealing with more than an equity holder.”
While Munger, who served as Berkshire’s vice chairman until his death in 2023, “enjoyed” real estate and did “a fair number” of deals in his final years, Buffett believes Munger’s true allegiance was always clear.
“I think if you’d asked him to make a choice when he was 21, that he’d either be in stocks exclusively the rest of his life or real estate the rest of his life, he would have chosen stocks in a second,” Buffett said.
For Buffett, the simplicity of stock investing is hard to beat. He noted that you can walk down to the New York Stock Exchange and “do billions of dollars worth of business totally anonymously,” all within five minutes.
Real estate, by contrast, is a slow grind. “[The negotiation] just begins when you agree on deals — and then they take forever,” he said.
At his age, Buffett’s takeaway is clear: “For a guy at 94, it’s not the most interesting thing to get involved in something where the negotiations could take years.”
How to invest like Buffett
Buffett has built his legacy on seizing opportunities in the stock market. Under his leadership, Berkshire Hathaway has delivered enormous returns to shareholders over the decades.
And while the Oracle of Omaha plans to step down as CEO later this year, everyday investors can still follow one timeless strategy he champions — no stock-picking skills required.
“In my view, for most people, the best thing to do is own the S&P 500 index fund,” Buffett famously said.
This approach gives investors exposure to 500 of America’s largest companies across a wide range of industries, providing instant diversification without the need for constant monitoring or active management.
Buffett’s belief in this strategy runs so deep, he’s built it into his own estate plan — directing that 90% of his wife’s inheritance be invested in “a very low-cost S&P 500 index fund” after his passing.
The beauty of this approach is its accessibility — anyone, regardless of wealth, can take advantage of it. Even small amounts can grow over time, and some apps like Acorns automatically invest your spare change.
Signing up for Acorns takes just minutes: link your cards, and Acorns will round up each purchase to the nearest dollar, investing the difference — your spare change — into a diversified portfolio. With Acorns, you can invest in an S&P 500 ETF with as little as $5 — and if you sign up today, Acorns will add a $20 bonus to help you begin your investment journey.
Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
How to invest in real estate without the headaches
While Buffett doesn’t mince words about the complexities of real estate, he still points to it as a prime example of a productive, income-generating asset.
In 2022, Buffett stated that if you offered him “1% of all the apartment houses in the country” for $25 billion, he would “write you a check.”
Why? Regardless of what’s happening in the broader economy, people still need a place to live. And with an estimated shortage of 4.5 million homes in the U.S., the demand for rental housing remains strong, helping keep occupancy rates high and rental income flowing.
But Buffett’s caution about how real estate transactions still holds true — even at the individual level. In the U.S., it typically takes 30 to 60 days to close on a home after an offer is accepted. Conditions, clauses and financing delays can drag the process out even further.
The good news? These days, you don’t need to buy an entire property — or hunt for deals yourself — to start investing in real estate.
For accredited investors, Homeshares gives access to the $36 trillion U.S. home equity market, which has historically been the exclusive playground of institutional investors.
With a minimum investment of $25,000, investors can gain direct exposure to hundreds of owner-occupied homes in top U.S. cities through their U.S. Home Equity Fund — without the headaches of buying, owning or managing property.
With risk-adjusted target returns ranging from 14% to 17%, this approach provides an effective, hands-off way to invest in owner-occupied residential properties across regional markets.
If you’re not an accredited investor, crowdfunding platforms like Arrived allow you to enter the real estate market for as little as $100.
Arrived offers you access to shares of SEC-qualified investments in rental homes and vacation rentals, curated and vetted for their appreciation and income potential.
Backed by world-class investors like Jeff Bezos, Arrived makes it easy to fit these properties into your investment portfolio regardless of your income level. Their flexible investment amounts and simplified process allow accredited and non-accredited investors to take advantage of this inflation-hedging asset class without any extra work on your part.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
