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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 take 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 latest annual shareholders meeting, when asked why he isn’t buying more real estate (1).
Buffett pointed to the complexity and sluggishness of real estate deals compared to the ease and speed of stock transactions.
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“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 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 Buffett, 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 anonymously,” 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, and with his own retirement slated for the end of 2025, 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.”
How to invest like Buffett
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 that 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.
Invest in index funds with ease
If you want to capitalize on Buffett’s advice, you might consider using a DIY trading platform like Robinhood to invest in ETFs or index funds. You can also pick out individual stocks yourself if you feel confident in making market moves.
Robinhood has 24/7 support, and you won’t pay any commission fees on stocks, ETFs and options. Their platform also offers both a traditional IRA and a Roth IRA, so you can benefit from tax-efficient retirement investing.
New Robinhood customers can also get a free stock once you sign up and link your bank account to the app.
You can pick your stock reward from top American companies, with amounts ranging from $5 to $200.
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Is Buffett still following his own advice?
It’s worth noting that Buffett’s Berkshire Hathaway recently made headlines for unloading its entire position in the Vanguard S&P 500 ETF and SPDR S&P 500 ETF Trust — two low-cost exchange-traded funds the company had previously held for years. Buffett didn’t say why his company chose to completely exit two established S&P 500 ETFs.
While Buffett didn’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 stated 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., the demand for rental housing remains strong, helping keep occupancy rates high and rental income flowing.
But Buffett’s caution about how real estate transactions 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.
Tap into the $35 trillion home equity market
For accredited investors, Homeshares gives access to the $35 trillion U.S. home equity market, which has historically been the exclusive playground of institutional investors.
With a minimum investment of $25,000, investors can gain direct exposure to hundreds of owner-occupied homes in top U.S. cities through their U.S. Home Equity Fund — without the headaches of buying, owning or managing property.
With risk-adjusted target returns ranging from 14% to 17%, this approach provides an effective, hands-off way to invest in owner-occupied residential properties across regional markets.
Invest in real estate without the added headaches
A second property may sound like a smart investment, but it’s not exactly low maintenance.
A rental home can cause added headaches with leaky faucets, late-night tenant texts and unexpected repair bills — all of which can chip away at your potential returns. Not to mention, renters don’t always pay on time — which could become a real problem if you’re planning on relying on the monthly rental checks to cover the mortgage.
Personal finance guru Dave Ramsey claims it’s a “ridiculous assumption” that the renters are going to make the payments for you.
“Anybody who’s ever had a renter or been a renter, and I’ve been both, I have been a renter too, knows that sometimes renters don’t pay,” he said on the Ramsey Show (2).
“Sometimes, there’s cancer. Sometimes, there’s car wrecks and job loss. Sometimes, there’s a pandemic.”
Luckily, crowdfunding platforms like Arrived can help you become a landlord without having to worry about any of these problems. The best part? You can get started with as little as $100.
Arrived offers you access to shares of SEC-qualified investments in rental homes and vacation rentals, curated and vetted for their appreciation and income potential.
Backed by world-class investors like Jeff Bezos, Arrived makes it easy to fit these properties into your investment portfolio regardless of your income level. Their flexible investment amounts and simplified process allow accredited and non-accredited investors to take advantage of this inflation-hedging asset class without any extra work on your part.
Build a real estate portfolio with ease
Another real estate crowdfunding platform you might want to consider is Mogul
Founded by former Goldman Sachs real estate investors, the team hand-picks the top 1% of single-family rental homes nationwide for you. Every property goes through a strict screening process and must project a minimum 12% return, even in downside scenarios.
Mogul’s portfolio averages an 18.8% IRR and 10–12% annual yields, and many offerings sell out within hours. Average investments typically range from $15,000 to $40,000, and your stake is backed by real property.
Getting started is a quick and easy process. You can sign up for an account and then browse available properties. Once you verify your information with their team, you can invest like a mogul in just a few clicks.
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Article Sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
CNBC, Youtube (1); The Ramsey Show Highlights, YouTube (2)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.