The Farm
- Buffett purchased a Nebraska farm in 1986 for $280,000
- The earnings from the farm provided him with a 10% annual cash flow return
- Buffett estimates the farm is now worth 5 times what he paid for it (5.9% CAGR)
- Earnings have tripled
- So the estimated 6% annualized appreciation, plus a solid (and growing) annual earnings yield adds up to a superb 28 year investment
The Manhattan Building
- Buffett (with a few partners) bought a foreclosed retail building in New York near NYU from the Resolution Trust Corp in 1993
- The property improved occupancy rates as the market recovered and earnings increased, allowing Buffett and his partners to refinance the building, drawing out roughly 150% of what they invested (so they got their initial investment back–and then some–and kept the cash flowing asset)
- The property now provides annual earnings dividends equaling about 35% of the initial equity investment
Buffett said:
