Ever had to implement your exit plan/strategy?

Question

Have you ever got into something then realized for one reason or another you needed to quickly back out?

What caused it? Common pitfall? How did it ultimately end?

Jon K. · Answer

I didn't "back out" but switched to an alternate exit strategy. I had a house under contract, sight unseen (in-person at least) that I intended to hold as a rental. It was a townhome the owner had converted from a 3 bedroom to a 2. I thought that it would be trivial to convert it back to a 3 as well as possibly put a 4th bedroom in the basement.The owner didn't want to show me the inside prior to us signing the purchase contract because he didn't want to let on to his tenant that he was selling the place. But he had photos on zillow from the most recent rental listing from just 2 years back. Based on his description of the place and the photos, we agreed on a price and signed a contract. After that he was fine letting me take a look.

When I saw the place in person, I found it was in even better condition than the photos showed as the tenant really took care of the place. However the layout wasn't what I expected and I couldn't covert it back to a 3 bedroom, let alone a 4, without more expense than I had bargained for. It would still have cash flowed okay as a 2 bedroom rental but not well enough for my tastes so I assigned the contract instead. I really prefer 3 or 4 bedrooms.

Not sure if there's a lesson to be learned from this other than having the option to have multiple exit strategies on any one deal.