The Tide is Out For Investors—Where Do You Put Your Money Now?

Key Takeaways:

– The rising tide of real estate investing has turned amateurs into gurus, but now the tide is receding and revealing the true state of investors.
– Many real estate investors are experiencing suspended distributions, capital calls, and total losses.
– Despite the current challenges, sound investments with strong profit potential are still available.
– Investing like Warren Buffett, who has had profitable deals done over dinner and with a handshake, can be achievable in turbulent times.
– Building relationships based on time and trust is key to finding undervalued opportunities.
– A case study of a mobile home park acquisition shows the importance of empathy, trust, and vision in securing a deal.
– The investor in the case study improved the asset and investor returns by tackling deferred maintenance, making infrastructure improvements, raising lot rents, and expanding the park.
– The value of the park increased significantly in the first year and is expected to continue growing.
– Cash flow to investors is currently strong, making this a potentially safe investment.
– The acquisition process, value-add proposition, and execution of the investment resemble Warren Buffett’s approach.
– The article concludes by asking readers how they are finding deals in the challenging economy or if they are waiting on the sidelines.


We’ve all seen how the rising tide turned amateurs into real estate gurus this past decade. But as Warren Buffett famously said: “Someday the tide will go out. Then we’ll see who’s swimming naked.”

Well, someday has arrived. 

Are you swimming naked in a receding tide? Or shivering on the beach in a winter coat? A quick scan of real estate investing news shows a lot of bare skin, as well as reports of many investors retreating to the beach. 

But you don’t need to retreat. Sound investments with strong profit potential are available right now—if you know where to look. I’ll demonstrate that in a moment. 

And many real estate investors are experiencing suspended distributions, capital calls, and even total losses. (This punctuates BiggerPockets’ mission to educate investors on due diligence and diversification, but that’s a topic for another day).

You, Too, Can Invest Like Buffett

If you and I could have invested with Warren Buffett decades ago, our Berkshire Hathaway stock could have lost over 99% of its value and still trounced the S&P 500 in the same period. We don’t have a time machine, so we can’t invest with Buffett in 1965. But we can look for opportunities to invest like Buffett—especially in turbulent times like these. 

Some of Buffett’s most profitable deals were done over dinner, with a handshake and a few notes on a napkin. One happened on a 15-minute call. (You’re about to see why this matters.)

These acquisitions didn’t happen in a vacuum. They happened because of relationships built on the basis of time and trust. These are commodities in short supply these days. 

All these deals had gaping holes that caused them to be undervalued at the time of acquisition, resulting in significant wealth-creating potential for Buffett and his investors. 

You may think opportunities like this are out of reach for you, especially in this low tide. But we can assure you that’s not true. 

A Case Study

Part of our mission at BiggerPockets is to educate you to invest in deals most investors only dream of. Like this surprising one, for example: 

“The Johnsons” operated a mobile home park they built it in the early 1980s. Though it was family-run, it was among the region’s largest parks. And their popular county was the fastest-growing in the state. 

But the aging patriarch faced health challenges. And the kids didn’t want to run it. The family was ready to exit. 

As you can imagine, interest in this large park was quite strong. Institutional investors and fast-talking brokers circled. Large numbers were discussed. Lofty promises were made. 

But one mobile home park operator (Mark) was different. Mark loves people. And he knows how to make profitable investments. 

Mark got to know the family and genuinely empathized with their situation. He understood their desire to care for the tenants the family had cared for over decades. 

Mark had dinner with the family at their home. He sent a gift basket during the patriarch’s hospital stay. Mark listened to their vision of how they would improve and expand the park if they could. He also checked in on individual family members during the whole process.  

And Mark submitted an offer to buy the park. But it wasn’t the highest offer. So how did he acquire it? 

Like many families, the Johnsons were as concerned about their legacy as they were about their bank account. They wanted to know the buyer cared about them and their tenants. They accepted Mark’s offer because they trusted him and believed in his vision for the park’s future. 

Note: The investment described above is closed and no longer accepting new capital.  

So, How Do Investors Benefit? 

Like most mom-and-pop mobile home parks, there were dozens of empty lots. It’s capital- and management-intensive to acquire and set up new homes on these lots, and this is particularly tough because lot rents were far below market rates. 

There was also vacant land adjacent to the park. But, the county approval process to expand a park is not for the faint of heart. In fact, it’s almost unheard of these days. 

Mark undertook a number of initiatives to improve the asset and the investor’s returns. First, his experienced team tackled much-needed deferred maintenance to enhance the park. Then, they made improvements to roads, curb appeal, and other infrastructure. Over the following year, they raised lagging lot rents up to about 10% below the competitive rate. 

The high demand for affordable housing in this growing county motivated them to acquire and set up homes that would be sold to new residents. Residents financed homes through arrangements Mark’s team had with manufactured housing lenders. 

The strong demand for housing prompted Mark to apply to expand the park by 70 lots. The county’s need for affordable housing prompted them to swiftly approve the request. The park will have 438 lots when complete. 

A third-party appraiser estimated the team’s initial actions resulted in an increased park value of $6 million in the first year. Mark believes the value will be up at least $10 million after executing the full expansion in the years to come. 

Cash flow to investors is currently strong, and with a 4.9%, 10-year fixed (five-year, interest-only) loan at about 50% LTV, this could be a safe investment (there are no guarantees in this world). 

The acquisition process, the value-add proposition, and the operator’s execution of this investment seems quite Buffett-esque to me. 

How about you? How are you finding deals in this challenging economy? Or are you waiting it out on the sidelines?

Ready to succeed in real estate investing? Create a free BiggerPockets account to learn about investment strategies; ask questions and get answers from our community of +2 million members; connect with investor-friendly agents; and so much more.

Mr. Moore is a partner of The Wellings Real Estate Income Fund, the investment advisor of the Wellings Real Estate Income Fund (WREIF), which is available to accredited investors. Investors should consider the investment objectives, risks, charges, and expenses before investing. For a Private Placement Memorandum (“PPM”) with this and other information about the Wellings Real Estate Income Fund, please visit, call 800-844-2188, or email [email protected]. Read the PPM carefully before investing. Past performance is no guarantee of future results. The information contained in this communication is for information purposes, does not constitute a recommendation, and should not be regarded as an offer to sell or a solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be in violation of any local laws. All investing involves the risk of loss, including a loss of principal. We do not provide tax, accounting, or legal advice, and all investors are advised to consult with their tax, accounting, or legal advisers before investing. Mr. Moore and Wellings Capital are not affiliated with BiggerPockets. 

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.

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Property Chomp’s Take:

In this article, we discuss the current state of the real estate market and how it has exposed the weaknesses of many amateur investors. As Warren Buffett famously said, “Someday the tide will go out. Then we’ll see who’s swimming naked.” Well, that day has arrived.

Many real estate investors are experiencing financial difficulties, with suspended distributions, capital calls, and even total losses. This highlights the importance of due diligence and diversification in investing, something that BiggerPockets has been advocating for.

While we may not have a time machine to invest with Warren Buffett in the past, we can still learn from his investment strategies. Buffett’s most profitable deals were often done through relationships built on trust and time. These deals were undervalued at the time of acquisition, offering significant wealth-creating potential.

One case study that exemplifies this is the story of “The Johnsons,” who owned a mobile home park. Despite receiving numerous offers from institutional investors and brokers, they chose to sell to a mobile home park operator named Mark. Mark built a relationship with the family, empathized with their situation, and presented a vision for the park’s future that aligned with their values.

Mark saw the potential in the park, despite its challenges. There were vacant lots and adjacent land that needed development. Through careful management and improvements, Mark was able to increase the park’s value by $6 million in the first year alone. He plans to expand the park further, with an estimated value increase of at least $10 million.

The key takeaway from this case study is that opportunities like this exist even in challenging times. By building relationships, identifying undervalued assets, and executing a value-add strategy, investors can find success in real estate. This approach mirrors Buffett’s investment philosophy.

In conclusion, while the real estate market may be experiencing a downturn, there are still opportunities for savvy investors. By following the example of successful investors like Warren Buffett, individuals can find sound investments with strong profit potential. It’s all about knowing where to look and being willing to put in the work.

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