Warren Buffett, the world renowned stock market investor, has over the years bought heavily into brands such as Coca Cola and Gillette, based on his established principles. His US company, Berkshire Hathaway, has grown in value to over $360 billion, and the crux of his ethos is to invest for the long term in quality. But what can you draw from Warren Buffett’s investing style in the context of buying property in Budapest? His top lessons on how to buy shares of companies on the stock market can equally help you make the best property purchase decision. Here are three really powerful lessons:
Lesson 1: Buy something good quality which has a competitive advantage
The most smart thing you can do is to find the most desirable property for your budget. For example, an apartment with all the ingredients that most buyers would ideally like – i.e. upper floor, street view, with a lift, with a balcony – will continue to be very attractive in future, as these properties will remain in the minority because they have all of these desired elements within one package. That would be an ongoing competitive advantage for such a property.
Being able to do this successfully underpins another of Warren’s mantras, which is to invest in something you understand – i.e. it’s important to build up your knowledge before buying. This is why Warren is a firm advocate that you should invest in yourself, so that you’re in the best position to make the selections that will produce the strongest results for you in future. Start learning everything you can on the subject as soon as you can, since knowing how to buy quality is paramount. Don’t be tempted to skip the research. Remember this: you yourself are the only problem you will ever have and you are the only solution!
Lesson 2: Buy at a reasonable valuation and with a long term mentality
Look at the price per square metre of comparable apartments in the districts you’re interested in, so that you can learn to spot when something is fairly priced or even undervalued. Then hold onto your property long term. Price trends go up over the long term, so be prepared to be philosophical about market fluctuations and on a minimum ten year timeline. Warren himself wouldn’t buy anything he didn’t feel comfortable holding for at least that long. Buying something to sell soon after for a quick profit is really not his style. Smart thinking whispers words worth listening to: “find a good apartment in a good building at a fair price to serve you for the long term.”
Lesson 3: Invest in something with great management, and check its debt
Making the important assessments and enquiries about a building in Budapest is not so different from reading a company’s annual report and knowing what healthy signs to look for within it. The Budapest property lesson here is to look for a good and proactive common representative who promotes the interests of the building, and to assess how well the building is being maintained. When you view a property, use your eyes to see how well the building is performing. How healthy is it looking? Are its prospects improving? Is the building in debt because some people are not paying the common cost, or does the building hold a healthy positive balance in its bank account which is being saved up to invest in improvements? The latter puts a big tick in the box.
About the Author:
Martin Green is the author of the book Buy Property in Budapest With Confidence: 100 Tips, an independent guide that continues to help ordinary people, step by step, to buy property the smart way in Hungary’s capital city.