So, Warren Buffett is investing billions in real estate, now there’s a man who knows his onions…!

Warren Buffett - AP Photo/Dennis Cook

I think everyone knows that Mr. Buffett is the world renowned business ‘go-to guru’ – the daddy of them all, when it comes to investment. When it comes to staying ahead of the markets, or in a pithy phrase cutting to the bone and getting right to the heart of the matter in a mere sentence, he’s without compare. His quotes on investment and the timing of same are simply legion, found and used in business presentations, textbooks and articles around the globe.

One of my personal favourites has always been the one that says: “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful”, which I found very interesting to recall, when reading reports that Mr. Buffett is investing $3.85 billion in betting heavily on a US housing market recovery.

This investment is hugely encouraging not just for agents and developers in the USA, but I believe internationally also, in markets that mirror much of the US such as Spain…

The Berkshire Hathaway Inc. HQ

It is reported that through his firm Berkshire Hathaway Inc., Mr. Buffett has submitted a $3.85 billion bid for the mortgage and loan business of bankrupt Residential Capital LLC. This is apparently seen as a “picks and shovels” approach to an investment in a US housing recovery by buying companies which he considers will benefit strongly from an upturn, without purchasing real estate directly. It seems he feels now it’s decidedly and determinedly best to be greedy.

More exciting though as a guide to the future for the individual buyer or investor, it’s further commented upon that the world’s third richest man told CNBC earlier this year that his actual preference would be to invest directly in residential real estate if the administration costs were not prohibitive.

He is reported to have said: “If I had a way of buying a couple hundred thousand single-family homes… I would load up on them and I would take mortgages out at very, very low rates”.

All of this comes not at a reported upturn in the market but when the news from the US real estate market is not consistently positive as foreclosures have fallen on an annual basis for 20 straight months now.

The offer "certainly indicates that he thinks the worst is behind us," says Jeff Matthews, author of 'Secrets in Plain Sight: Business & Investing Secrets of Warren Buffett'.

Furthermore, this is the same Warren Buffett who said: “I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years”. So I read that, in every way, as a pretty big vote of confidence in general residential real estate, signifying that the market has a great future, having been effectively hammered to its knees by a 50% reduction across the board.

And it would be my view that the same truth will equally apply here in Spain, where any agent will tell you that official statistics of 35% price falls in the market are actually far short of a reality.

The market has already, in most cases fallen 50% in key areas, these prices of course being from peak to trough.

This fact has simply not filtered through the normal process of reporting yet, and possibly may not for the rest of this year. Such are the machinations by which Spanish real estate transactions are judged, and are typically found to be lagging a year behind.

Everyone – buyers, vendors, developers, agents, and yes even the banks – has waited a long time for good news stories or activity to come along. We would, however, propose the caveat that an individual should only enter the market when the time is right and ready for them to meet their own personal criteria.

Still, with VIVA opening a new office last week, and a total of four branch offices looking to be delivered along the Costa del Sol hopefully by September, we ourselves can obviously prove and point to a significant shift and upturn in activity, demonstrating that more than a little improvement in the market is taking place, after some 6 to 7 long, hard years of downturn.

And here is what Mr. Buffett had to say about hard times: “We’re still in a recession. We’re not gonna be out of it for a while, but we will get out.” Of course we are and we will, and where better than the Costa del Sol to be when we do? I had the wonderful and personal experience of the benefit of this when moving here in 1989, and at that time seeing the Coast rise fantastically and with huge success out of a European and British recession.

The moment to “be greedy when others are fearful” may now be upon us. Well, at least for some. It’s not something I’m saying promotionally or across the board. I leave that to you the individual to decide, as too many salespeople, marketers and the like, have been overly fond of using, turning and abusing Mr. Buffett’s quotes to their own devious ends.

I would rather VIVA practised another one of his famous quotes, which we have always considered incredibly valuable: “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.” So, we will go onward and upward constantly trying to do things differently.

Yet, I think it fair to report that if Mr. Buffett is investing $3.85billion in a bet on residential real estate, there’s probably a silver lining for others there, too.