Warren Buffett and Berkshire Hathaway (NYSE:BRK-A) are now looking to the real estate sector for some great bargains, and it looks like they have a lot to pick from, as their deal for Schiller Real Estate, a firm based in the Chicago area shows.
Berkshire will merge Schiller with their other real estate acquisition in the Chicago area, Koenig & Strey Real Living, which they bought in September 2009.
Warren Buffett is the ultimate contrarian investor, in the sense of waiting for sectors which have been hammered down to appear, and then sifting through the wreckage for the best deals. Real estate is one of the more obvious ones, and the Omaha shark is swirling around smelling the blood and liking what he sees.
For Buffett and investors in Berkshire Hathaway, which have long-term outlooks, it's no problem that they'll have to wait for the real estate market to turn around, as there is no interest in the short term for returns on investments, and with the real estate market in the United States probably will start to turn around near the end of 2010 or beginning of 2011, at least that's what Buffett believes will happen.
Still, as I mentioned, whether it does or not won't really matter, as he will hold his real estate investments like the majority of his other investments - for the long term.
With banks, for the most part, not lending out for real estate, opportunities for companies like Berkshire, and even to a larger extent, REITs, are finding all sorts of undervalued properties out their for bargain prices which will pay off in the long run.
I'm sure we'll hear more from Berkshire Hathaway in real estate before the market actually begins to rebound, as the prices are where Warren Buffett likes to see them.
Of course Buffett is focusing on companies like Schiller Real Estate than he is properties in and of themselves, but the two are of course interconnected, and one doesn't perform well without the other.
The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com
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