Home News I Just Sold a Rental Property and Can’t Help But Feel Like I Got Hosed

I Just Sold a Rental Property and Can’t Help But Feel Like I Got Hosed

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I’m not new to investing and have spent more than half of my life on the stock market with money.In fact, when Charles Schwab And that discounted trading model was a novelty that confused the old Wall Street regime.

This helps explain why I was so shocked when I sold my rental property a few months ago. I made money on the deal, but I can’t help but feel ridiculed anyway.

Stock trading

I’ve been investing since my dad brought me into the market when I was a teenager. The first stock I bought myself was a utility with reduced dividends. I remember calling a broker and telling him what I wanted to do. I was nervous, so I made a mistake in the name of the company I bought. I bought less than 100 shares, but if I remember correctly, the fee was about $ 100. That’s an almost unthinkable amount today, but it was a long time ago.

Image Source: Getty Images.

From that point on (and thanks to discount brokers like Charles Schwab, who have grown into an industry giant with $ 18.5 billion in revenue), fees have plummeted. In fact, in many cases investors can trade without fees.Don’t fool yourself-brokers are making money from your transactions Send an order to a specific market maker. You just don’t pay directly. So for most investors, the transaction costs are virtually zero today.

That’s what I’m used to. Selling a property is completely different.

Sum the numbers

When selling real estate, the first and largest cost is the brokerage fee. I had to pay 5% and was split into a listed broker and a buyer side-by-side broker. That’s normal and I don’t like the cost, but it makes some sense.

All stocks in a company are exactly the same as any other stock, so you don’t need to explain exactly what you’re selling. Properties aren’t like that at all, they differ in so many ways, from location to individual state. The property’s “market” is also local in nature, so you need someone on the ground to sell it.

Most properties, on the other hand, are so expensive that not most people can buy them on a whim and often need a mortgage to get over the finish line. This further complicates the situation that brokers typically have to assist in organizing sales processes that can take weeks or months to complete.

Three people in front of a house with a sign for sale on the lawn.

Image Source: Getty Images.

Honestly, Real estate investment trust (REIT) It was a much easier and more cost-effective call with a generous yield-for example. WP carry ((((WPC -0.86%). Like a landlord.

WP carry, REITs I actually ownIs diversified worldwide and has an incredible history of dividends. If you are looking to generate income from real estate, it is a strong investment candidate.

When I bought a rental property, I was planning to retire, so I thought it was a “house of the future” rather than an “investment.” Things have changed. Still, I’m not so angry because I sold for a lot of profit-although 5% of the selling price was directly in the broker’s pocket.

But that wasn’t the only cost I faced. After the deal was closed, I got a three-page document outlining all the puts and takes from the deal. I had to pay the ownership fee, transaction fee, certificate tax, and-because it was a condo-to the Condo Association. After all, my transaction cost was about 7% of the selling price.

So I had to add another 2% or so in addition to the 5% fee I knew I had to pay. This is a very large number for those who are paying virtually nothing to trade stocks. Moreover, when talking about home prices, 2% can quickly become a large absolute value. And to be honest, given today’s technology and the increasingly free flow of information, it’s hard to understand why all these costs exist.

Happy i am then

Sadly, I had some negative experiences while owning the property I told you about. Not worth owning a rental property My time and effort. I stick to REITs like WP Carry. So I made money on a rental property, but overall it wasn’t the best experience. And the cost of selling assets was another blow. At this point, I’m sure I’m going to avoid rental properties from now on. The cost (both dollar and emotional) is not worth the benefit to me.

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