Warren Buffett, the CEO of Berkshire Hathaway and the sixth richest person in the world, is known for his frugal lifestyle and wise investment decisions. One of his most famous personal investments is the modest home he bought in Omaha, Nebraska, in 1958 for just $31,500, or about $329,505 in today’s dollars.
The Oracle of Omaha’s residence
Buffett has lived in the same five-bedroom house in the central Dundee neighborhood of Omaha for over six decades. He has often said that it is the third-best investment he ever made, behind only his wedding rings. He considers the house to be a source of happiness and comfort for him and his family.
The house, which was built in 1921, has a living area of 6,570 square feet and sits on a corner lot of 0.72 acres. It features a sunroom, a dining room, a master suite, and a fireplace. It also has a security fence and cameras to protect Buffett from unwanted visitors.
According to Realtor.com, the house is currently valued at approximately $1,439,000, which is 44.44 times more than what Buffett paid for it. That is a remarkable return on investment, even for the legendary investor.
Buffett’s views on homeownership
In a 2010 letter to his Berkshire Hathaway shareholders, Buffett expressed his belief that homeownership makes sense for most Americans, as it provides them with stability, security, and tax benefits. However, he also acknowledged that he would have made far more money if he had opted to rent and used the purchase money to buy stocks.
He wrote: “All things considered, the third best investment I ever made was the purchase of my home, though I would have made far more money had I instead rented and used the purchase money to buy stocks.”
He also warned that buying a house can turn into a nightmare if the buyer overspends and stretches beyond their financial means. He advised buyers to be cautious and realistic about their affordability and not to rely on lenders who may offer them loans that they cannot repay.
He wrote: “A house can be a nightmare if the buyer’s eyes are bigger than his wallet and if a lender – often protected by a government guarantee – facilitates his fantasy. Our country’s social goal should not be to put families into the house of their dreams, but rather to put them into a house they can afford.”
Buffett’s other real estate investments
Although the Omaha house is the only real estate in Buffett’s personal portfolio, he has also owned and sold other properties in the past. For instance, he bought a beach house in Laguna Beach, California, in the 1970s for $150,000 and sold it in 2018 for around $7.5 million. He also owned a different Omaha home for a few years before he moved to his current residence.
Buffett has also invested in real estate through his company, Berkshire Hathaway, which owns several real estate brokerage firms, such as HomeServices of America and Berkshire Hathaway HomeServices. He has also bought shares of real estate investment trusts (REITs), such as Store Capital and Seritage Growth Properties.
However, Buffett has always maintained that his Omaha house is his favorite and most meaningful investment. He once told CNBC: “I wouldn’t trade it for anything.”