Buy Banks! Play the Bailout the Buffet Way

Warren Buffet is buying! The man who has been sitting on piles of cash for years is now in the game. This proves one thing, there’s blood in the streets and he’s making his move.

So what is he buying? He’s buying banks! That should be a signal to all of us that the time is right for us as well. This huge government bailout is associated with one thing, the credit crisis. That crisis has reached a fevered, political pitch and that means opportunity for those of us who choose not to panic.

There is a unique way to play this $700 billion banking bailout and we can emulate great investors like Buffet. We can BUY banks! There are many bank buildings that are empty and just sitting there waiting for creative investors to reposition them and turn them into something new.

With this crisis and the bailout, more banks are likely to come available. As industry giants alike Wachovia and Washington Mutual are snapped up for a song by Wells Fargo, Citigroup and Bank of America, more bank buildings will become vacant and put up for sale.

There are many ways to play the bank bailout. One is to put together a group of partners and go make low-ball offers on buildings that have been on the market for more than 6-months. Banks are strapped for cash and other than having to deal with a 10-year restriction that no other bank can occupy the space, these buildings can be bought for a fraction of their value in a normal market.

You could also invest in syndications. There are several real estate firms that are actively seeking investors to fund their purchases. The investment minimum is usually around $25,000 and offers an 8% annual return with a 10% bonus at the end of the third or fifth year. You can be a real estate investor without the hassle!

So once you’ve bought an empty bank building, what can you do with it? The ideas are endless. How about taking the drive through teller positions and turning them into a hand car wash and detailing center. The traditional wide open interior can easily be partitioned into office space and because of the vault and safety deposit boxes, some of that space can be turned into a mail-boxes-etcetera style shipping center.

As a matter of fact, Fed-Ex/Kinkos style businesses would do great in an old bank building or, how about a check cashing facility. The parking lots are usually huge and are large enough that the facility would make a great used car lot. I’ve even seen an old bank building turned into a restaurant where the vault was used as the wine cellar and private tasting room.

If done properly, playing the bank bailout could be quite lucrative. Whether you buy the bank yourself, create a partnership or invest in syndications, don’t miss this great opportunity. An old bank building could be your next Cash Flow Monster.

Michael Gross is the President of Dividend America Mortgage and has been in real estate for over 20 years. He has been a builder, a Realtor, an appraiser, and currently he is a lender and an active real estate investor. He uses all of his experience and knowledge to show individuals how to properly use a mortgage as a tool to help create greater wealth through real estate investing. For more information on residential and small commercial loans please call 770-350-7373 or email mgross@dividendamerica.com