SUB30kClub - exit strategies and financing - what do you use?

[Christina R.]

One of the major objections I have heard from seasoned investors in my area (Baltimore, in particular) is that these 30K low-end properties leave you with limited exit options.

I'd like to hear from the seasoned investors out there what they use for exit strategies when they buy one of these properties. For example, in many parts of Baltimore you can force appreciation by rehabbing the property and then renting it, yet there is not . . . what's the word . . . natural? perhaps MARKET appreciation of these properties in many areas and many of these areas are not OO areas so to whom could you liquidate if you needed to?

Which then leads me to ask the question, what is the preferred method of financing these types of properties. For example, an HML is often tough to obtain on these because of the % of ARV.

Would like to hear from those in the trenches. Thanks in advance!

[Rick Baggenstoss]

I would tier exit options for $30k investments like this:

Higher probability:

- Sell as a 'turn key', seasoned, stabilized rental years later

- Sell as a lease option

- Sell retail*

- Portfolio refi cash-out

Lower probability:

- Refi cash-out (on a single home)

* The key is to buy a sub$30k house where houses are also selling for >$60k - $90k fixed up. Then you have more options. If you're buying a $30k house where a lot of others are also $30k, you're choices are limited ... just as limited as when you pay $100k for a house where other houses are selling for a $100k.