- Posted September 28, 2022
What Every Stock Investor Needs to Know Before Buying Real Estate
If you’ve only ever invested in stocks, there is quite a bit you need to learn before switching over to real estate investments. The transition can be difficult if you’re unaware of the specific knowledge associated with real estate investing. The following information is critical to being a successful real estate investor according to our certified financial planner.
How Leveraged is Used
Leverage is the act of using financial tools to make a high ROI more likely. In real estate, this can be done on a much greater scale than with stock investments. Typically you can purchase a home with only 20% of the cost coming from you. 80% of the cost of the home comes from another person’s account, and yet you can still generate income from the entirety of the property. In stock investing, you could never earn income like this with only 20% of the cost being contributed by you. You have much higher leverage opportunities when investing in real estate. One of our certified financial planners can help determine if a real estate investment is right for you.
There are Extra Costs Involved
When you invest in real estate, there are more costs involved than just purchasing the property. Keeping track of these extra costs helps you stay financially stable and continue investing successfully. There are many extra costs to consider when investing in real estate such as a real estate agent’s commission, interest, and property taxes. Selling a property with a real estate agent means paying 6% of the sale price in commissions. This can end up being thousands of dollars out of your sale. If you prepare for extra costs like this, you’ll be able to handle them as they come up, and not get into any financial trouble.
Proper Marketing Techniques
After purchasing an investment property, you then need to know how to find tenants for that property before you can begin making money on the property. This begins with marketing the property to those who would be interested in the property. To get started, do some research into your target audience to figure out the marketing techniques that would appeal to them. Then, create a marketing plan to reach the most people possible. The more people who can see your listing, the more likely you are to find the perfect tenant for your property.
It’s important not to go into a real estate investment blind. Knowing the intricacies of real estate investment before getting started gives you a greater chance to be successful. Keep these in mind when investing in real estate and talk to one of our certified financial planners for advice for your specific situation.
Check out this article on financial products that are not just for the wealthy!
Contact Tenpath Financial Group for certified financial planning services.