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 choose 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 most recent annual shareholders meeting, when asked why he isn’t buying more property.
Buffett pointed to the complexity and sluggishness of real estate deals compared to the ease and speed of stock transactions.
“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 said he 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 him, 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 anonymous,” 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.”
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 even let you invest in an S&P 500 ETF with your spare change, making it easier than ever to build wealth alongside the world’s financial elite.
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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 said 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., demand for rental housing remains strong — helping keep occupancy rates high and rental income flowing.
But Buffett’s caution about how real estate transactions are rarely fast or simple 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.
Crowdfunding platforms, for example, allow everyday investors to own shares in rental properties without the large down payments or management headaches traditionally associated with real estate ownership.
Alternatively, real estate investment trusts (REITs) offer another way for investors to gain exposure to this asset class.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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