Despite rumors that the national real estate market is on its knees, some of the richest people in the world are banking their fortunes on properties. Jeff Bezos, Warren Buffet, and Elon Musk haven’t given up on the market, and there’s a lot to be learned from these incredibly savvy businessmen.
Jeff Bezos
Jeff Bezos is the founder of Amazon, the world’s largest ecommerce company. While he isn’t out buying properties to fix and flip or rent to potential tenants, he has found a brand-new way to capitalize on the real estate market. Jeff Bezos invested a great deal in a company called Arrived. It allows investors to buy shares of properties rather than the properties themselves. For just $100, anyone can buy a share of a property in one of the country’s hottest areas.
He wasn’t the only one who invested a significant sum, either. The founders of Uber and Salesforce Inc. also decided to put their money into the company.
There are a few caveats. Arrived stakes on single-family properties, but not just any property will do. In fact, the company underwrites an average of 0.2% of the homes presented to them, which makes it extremely lucrative. The listings sell out quickly, as well.
Warren Buffett
Despite openly admitting he is against it, Warren Buffett followed the old-school real estate investing route. Berkshire Hathaway, Buffett’s holding company for numerous businesses including Fruit of the Loom and GEICO, has a 7% stake in a homebuilding company that’s worth more than $400 million. While the market is slow now, that stake is sure to increase as it recovers in the near future. Berkshire Hathaway is also notorious for investing in REITs, or Real Estate Investment Trusts, which continue to perform well.
Elon Musk
Most folks know Elon Musk from companies like Twitter, Tesla, and SpaceX, but Musk also enjoys a handsome income stream as the result of his real estate investments. Recently, Musk said he might start building a residential area for his companies’ employees alongside a construction company known as Lennar Corp. While this has been met with some backlash and is certainly an interesting topic of debate, he’s calling the whole thing “Project Awesome,” and it’ll start with just over 100 homes in Texas.
Though nothing has been set in stone, it has been confirmed that local agencies have granted Musk the right to develop the subdivision. Furthermore, Bastrop County (the home of SpaceX) is experiencing a serious housing shortage due to the sheer number of people coming to the county to work for Musk.
Some of these real estate investing methods are not quite traditional, but they do send a strong message: the richest people in the world – even if they vehemently oppose real estate as an investment – continue to put their money into housing. If stocks and REITs aren’t right for you, consider using Elon’s strategy of searching for opportunities in underserved parts of the country and counties where job creation is outpacing housing solutions.