People think that because he is a stock investor he doesn’t believe in or invest in real estate. FALSE!
You might be surprised to learn that he is one of the biggest advocates for mobile home parks and mobile homes space. His holdings (Clayton homes, Cavalier homes, SE homes, and 18 offshoots of this first endeavor) are the largest makers and financers of mobile homes in the US. Though he does not own the land or the park, he does build and finance the homes themselves.
Think about it: Would you invest in a trailer if you thought it would ride away (like the buses you see at music festivals or that rock stars tour in)? No. he invests in the homes that are in the mobile home park costing $30-100,000 then are installed with a pad and skirted to look like a stick-built home. They then also help homeowners finance a home with 10% down where the industry usually wants much more down and high-interest rates, making the whole thing affordable and attainable.
Some mobile home parks have tiny houses and some mobile home parks are for high-end people wanting a minimalistic life. Depending on the geography you find all kinds of variations. Look up the founder of Zappos owns a park and lives in it so he could be part of the community instead of an anonymous life in a high rise building.
I admire Warren Buffett as a value investor, but when the high-quality company is beat up he also has the ability to see the value in an upcoming industry. MH investing is one of those he saw when the industry was at a low and no one served it’s home buyers and homeowners.
Why Investors Like Warren Buffett Are Bullish on Mobile Home Parks
He is a strong believer in the affordable housing movement and thinks this is the best play.
Besides owning and financing mobile homes through Clayton homes, Cavalier homes and other offshoots of Clayton homes he also has a good size position in a REIT called Store Capital that was started by 2 geniuses in the sale lease-buy back or financing of single-tenant commercial buildings.
The STORE Capital Story | STORE Capital
Let’s look further into the question of Buffett’s real estate holdings:
Here are some of Berkshire Hathaway’s holdings and their relationship to real estate:
Phillips66 another big holding basically owns the land that it explores for oil. Look up their annual report and you will so many projects and they own the land.
Costco buys and builds out its own warehouses (just look up Costco’s financial disclosures and you will see the massive square footage)
Amazon recently became one of the largest owners of real estate per square foot in the warehouse space because of its purchase of WholeFoods and it’s building of new distribution centers. Though you might think of these as energy stocks, retail stocks or food stocks, in the end, a lot of their balance sheet is strong because of real estate holdings.
JP Morgan Chase (also a favorite of Buffett’s) another of his big holdings in the last couple of years started getting out of leases and building their own branches and OWNING the real estate instead of renting. You probably have wondered like I did why there was a Chase bank going up from the ground up right next to an existing Chase bank. That’s why you see 2 chase banks side by side: one is the old lease and the new construction is them spending all those late fees, spread on HELOCs and management fees on the building.
Besides owning businesses that have strong real estate holdings on their balance sheet Buffett’s Berkshire Hathaway is also 100% owner of heavily invested in real estate sales companies (both boutique regional and national names) like Prudential real estate that is now Berkshire Hathaway, Sothebys real estate sales division, stories TX real estate company Ebby Halliday and more.
You can verify all this on Bloomberg and other sites that list a publicly traded companies holdings through a form called 13F.
So I submit to you, that even though Warren Buffett owns “only” a home in Omaha and a vacation home in Laguna Beach he is much more of a powerhouse in real estate than most people know and yes invests in real estate.
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Happy Investing!
