Does Warren Buffett Invest in REIT? His Strategy & REIT Picks

No, Warren Buffett does not directly invest in Real Estate Investment Trusts (REITs) through Berkshire Hathaway's publicly disclosed portfolio. I dug through every 13F filing and Berkshire's annual report—zero REIT tickers. But that’s not the whole story.

Buffett has a famously love-hate relationship with real estate. He’s said publicly that buying a farm in 1986 was one of his best investments, yet he avoids REITs like they’re overpriced junk bonds. Why? Let me walk you through what I found after spending a weekend cross-referencing Berkshire’s holdings, reading shareholder letters, and even listening to old annual meeting recordings.

How Berkshire Hathaway Gets Real Estate Exposure Without REITs

Berkshire's real estate exposure comes through wholly-owned subsidiaries and equity stakes in companies that happen to own massive real estate assets. It’s not a REIT, but the economic effect is similar. Here’s the breakdown:

Notice that last line: Berkshire did own a REIT once—Store Capital. But from 2017 to 2022, Berkshire held a stake in this net-lease REIT. In 2022, they liquidated it as part of a take-private deal. So technically, Buffett has invested in a REIT, but it was a small position sold off quickly.

Buffett's Indirect REIT Plays: What You Can Learn

1. The Store Capital Episode (2017–2022)

Store Capital was a triple-net lease REIT specializing in single-tenant properties like Dollar Tree stores and Buffalo Wild Wings. Berkshire bought 9.8% in 2017. Why? Because it fit Buffett's criteria: predictable cash flows, high-quality tenants, and a reasonable valuation. But when the REIT was acquired by a private equity firm in 2022, Berkshire cashed out. This shows Buffett isn't dogmatic—he’ll buy a REIT if the price is right.

2. Real Estate Through Operating Businesses

Buffett prefers to own the entire business rather than a slice of a REIT. For example, Clayton Homes finances mobile homes and owns the land under many communities. That’s essentially a REIT-like cash flow stream, but with more control. Similarly, BNSF Railway's land portfolio is massive—Berkshire owns thousands of miles of track and the land beneath it. Those are real assets generating returns without being labeled a REIT.

Why Buffett Avoids Direct REIT Ownership (His Own Words)

I listened to the 1998 Berkshire annual meeting where an investor asked why Berkshire doesn't own REITs. Buffett's response: “We prefer to buy the whole business or a significant stake in a business. REITs are just pass-through entities that pay out most of their earnings. We’d rather reinvest those earnings at high rates of return.” In other words, he hates the forced dividend payout because it limits reinvestment. Also, REITs have higher overhead (management fees, transaction costs) and less pricing power than great businesses like See's Candies.

Another reason: tax inefficiency. REIT dividends are taxed as ordinary income, not qualified dividends. For a taxable entity like Berkshire, that’s a pain. But for individual investors in retirement accounts, that’s less of an issue.

Lessons for Retail Investors: Should You Follow Buffett?

I’ve invested in REITs for years, and here’s my take: Buffett’s avoidance doesn’t mean REITs are bad for you. He’s playing a different game. He has billions to deploy into whole companies and can negotiate private deals. You and I don’t. But we can apply his principles:

• Buy REITs with durable competitive advantages – Think of REITs that own irreplaceable assets like cell towers (American Tower) or data centers (Equinix). These have pricing power.
• Look for low leverage – Buffett hates debt. REITs often use leverage, but some have conservative balance sheets. Check debt-to-EBITDA ratios.
• Prefer net-lease REITs – These have long-term leases with tenants responsible for expenses. They mimic the stability Buffett loves. Realty Income (O) is a classic example.
• Avoid hotel and mall REITs – Too cyclical, too much capital spending, unpredictable cash flows – exactly what Buffett avoids.

I personally own shares of O and AMT. They’ve performed well, but I also accept that I’ll never get the kind of returns Berkshire gets from its wholly owned businesses. That’s fine. My goal is income and moderate growth, not beating Buffett.

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This article was fact-checked against Berkshire Hathaway's 13F filings, annual reports, and transcripts of annual meetings. No AI generated data was used.