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5 Lessons From Warren Buffett That Are Applicable To Your Real Estate Career

When I was growing up, I did not have mentors to guide me. So I turned to books, both audio books and physical ones.


During my National Service Days, I went through a phase of personal development and picked up investing.


And one of my investment heroes is Warren Buffett, a phenomenal and independent thinker of our generation.


Principles in investing that applies just as much to the real estate business
Principles in investing that applies just as much to the real estate business

Here are 5 lessons I picked up that I believe are applicable to anyone in the real estate business.


Lesson #1: Your Life Is Like A Punch Card With Only 20 Spots


In the biography of Warren Buffet, The Snowball, the Oracle of Omaha said that we should look at life like a punch card.


There are only 20 spots on the card to be punched.


A punch represents an investment or a big decision to make.


When you use one, you got 19 left. Then 18, then 17.


“You’d get very rich,” he said, “if you thought of yourself as having a card with only twenty punches in a lifetime, and every financial decision uses up one punch.


You’d resist the temptation to dabble.


You’d make more good decisions and you’d make more big decisions.”


I've always thought about this.


Imagine, once I turned 40 years old, that means I am at the halfway mark of my life expectancy.


It means that I'll only have 10 spots left.


After I read this, it was like a punch in my gut. Next year, I will turn 40 years old.


Based on my experience in mentoring, it takes about 18 months for a full-time brand new agent to progress into an "experienced" agent in 1 segment of the market (E,g. new launches, resale HDBs, landed, commercial markets etc)


It takes about 3 years of consistent activity for an agent to transition to a confident one capable of handling most of the conversations that will arise when meeting customers.


Even confident agents may lose their confidence after going through a bad patch, or not adapting quickly in a fast changing environment.


And sometimes all it takes is 1 round of cooling measures and a market hiatus for a confident agent to lose their confidence if they do not have good guidance.


So the question is: How many more 3-year cycles do you have in you to succeed in this real estate business?



Warren Buffet's punch card analogy is a great reminder of the remaining 'chances' we have to take and to be selective of the challenges we choose to take up.


None of us really know how many more punches we have left.


Lesson #2: Spend Less Than You Make


Same house.


Same wife for fifty years.


Same Astrid on Farnam Street.


No desire to buy and sell real estate, art, cars, tokens of wealth.


No jumping from city to city or career to career.

All these came easy for Warren Buffet as he was a creature of habit.


To him, it was a natural tendency to let things compound and build up and to avoid the material trappings of the masses.


If a billionaire like him is able to prevent himself from the pitfalls of excesses, I think it is a good lesson for us to pick up.


Not just as a piece of financial advice but as a lifestyle we can adapt.


earn and spend wisely as a realtor

Lesson #3: Be Content With Moderate Gains


Zebulon Buffett who was Warren Buffett's great-great-grandfather wrote this letter to his son Sidney:


"If you go on in business, be content with moderate gains.

Don’t be too hasty to get too rich.…

I want you to live so as to be fit to live and fit to die." - December 1869


This was during a period where there were not much rules in place and a lot of free-wheeling activities happen.


The letter was a reminder that in a place where there was plenty of opportunity, one should focus on the long term.


Similarly as an entrepreneur, do not be in a hurry to chase wealth and displays of it, that you forget about the importance of business longevity and building relationships.


The takeaway lesson here?


Don't be too greedy.


As you broker more real estate deals and meet new people on your journey, remember those whom have helped you and how you got there.


“If you get to my age in life and nobody thinks well of you, I don’t care how big your bank account is, your life is a disaster.” — Warren Buffett


Lesson #4: Always Credit Your Success To Luck


Warren Buffett often spoke of the Ovarian Lottery.


“I have been very lucky. I was born in the United States in 1930 and won the lottery the day I was born.…"


Warren would later say,


“When I was a kid, I got all kinds of good things. I had the advantage of a home where people talked about interesting things, and I had intelligent parents and I went to decent schools.


I don’t think I could have been raised with a better pair of parents. That was enormously important. I didn’t get money from my parents, and I really didn’t want it.


But I was born at the right time and place. I won the ‘Ovarian Lottery.’


When I read that paragraph, I remember how lucky I was to be born in Singapore.


Sure, I was not born with a silver spoon but I was blessed in many other ways.


Clients who trust me with the plans I created for them.


Agents who are convinced of the value of NAVIS training and support platforms.


Leaders who believe in the long-term vision our team has laid out.


Crediting success to luck is important as it acknowledges the coincidences that allow for magic to happen.


I am sure back then, there were programmers who were as skillful as Bill Gates who nonetheless failed to become the richest person on Earth.


In the right context, many have merit, but few succeed.


luck in the real estate business.

What separates the two is luck.


Hard work and good luck will always stack the odds in your favour.


Lesson #5: Treat Every Dollar Like It Was Ten Dollars


"Warren looked at every dollar as ten dollars someday, he wasn’t going to hand over a dollar more than he needed to spend."


"Every penny was another snowflake for his snowball." - Chapter 16, The Snowball


The lesson to takeaway from this is NOT to become stingy and hoard your money.


But instead to view it from Warren Buffett's perspective to treat every dollar like it was going to be worth ten dollars.


That was how much he was paid to deliver newspapers. One dollar.

But he also treated it like it was worth 10x the opportunity.


In fact, when he was growing up, he had nightmares that he would wake up late and missed the paper route. (But he never missed a day.)


Because if you invest that one dollar, it really will end up being ten dollars some day in the future.

So why not pretend like it is currently its future worth?

real estate analytics

That certainly makes one pause before making any sort of purchase, from a latte to a house.


You have to really want something if it's worth ten times more to you than its sticker price.


Similarly, we can extend this to valuing our opportunities to 10x.


A new prospect or lead.


An existing client or referral.


All are opportunities that should be prized.


Conclusion


In life and business, most people need to make only 4 to 5 good decisions in life.


And in real estate, that means it can be distilled to the following 5 questions:

  • What is my true intention in entering the real estate market?

  • What is my business model to succeed in this industry?

  • Who or where am I going to learn from?

  • Why am I going to learn from them?

  • How will I define success in this industry?

Warren Buffet is guided by an Inner Scorecard and Outer Scorecard.


He could have bought and sold the businesses inside Berkshire Hathaway with a cold calculation of their financial return without considering how he felt about the people involved.


He could have become a buyout king.


He could have promoted and lent his name to all sorts of ventures.


But his long term business partner Charlie Munger said it best:


"In the end he didn’t want to do it. He was competitive, but he was never just rawly competitive with no ethics.


He wanted to live life a certain way, and it gave him a public record and a public platform.


And I would argue that Warren’s life has worked out better this way."


In life, I feel that we should be driven to go after success and wealth but not at the expense of losing authenticity of who we really are inside and to stay true to the philosophies we stand for.


It is easy in this industry, to get too focused and obsessed with being at the top, earning the most and giving up much of our soul to chase after how the environment wants us to behave.


So, it is important to always remember your inner scorecard.


How do you feel about your own performance and success?


Remain true to ourselves and not compromising on our values might be the greatest win when we look back in the future.


We experience happiness and meaning only when we are successful according to our Inner Scorecard.


The rest, you’ll figure out along the way.


Stuart Chng, Executive Group District Director of Huttons Asia, is a renowned leader and personality in the real estate industry.


He adores music and can play a few instruments decently without upsetting his neighbours. When not doing so, he enjoys pillow fighting with his son and coming up with silly puns which barely amuses his wife.


Professionally, he is a licensed real estate agent, an avid stocks, options and real estate investor, multiple businesses owner, team leader, speaker and columnist for several property newsletters and blogs and is often quoted in media interviews on 938FM, Channel 8, PropertyReport, PropertyGuru and other publications.


Throughout his career, he has helped many clients grow their wealth through selecting great property investments and managing their portfolios actively. Read his clients' reviews here.


Stuart has also coached many top million dollar producing agents from top real estate agencies in Singapore. Read his agents' reviews here.


 

P.S. Brand new and interested in the RES Course? Find out how to get your property licence and be a property agent in Singapore!


P.P.S. Passed your RES Exams? Find out what steps to take next to quickly achieve your goals!


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