Chapter eight of the UBG. Exit strategies. This is the big one. I want to make sure I have some very well defined exit strategies before getting into my first investment. This will be especially important if I decide to start flipping and use hard money. But I guess it's important for buy and hold properties as well. I was wondering what some of the exit strategies of some of the investors here on biggerpockets were. I would love to hear from house flippers as well as multi family property owners. Thanks ahead of time for any responses.
I always feel "exit strategies" is a bit of a misnomer. Often the strategy picks you rather than you pick the strategy.
If you can't buy a house you have under contract you better assign it or double close with an investor who can buy it. Or simply bail. That's the end of your strategy list.
If you don't have funds and wouldn't qualify for a mortgage but can borrow from a private lender at high rate and can buy the property you better make sure you can sell it again quickly after anywhere from no to major rehab.
If you have funds or could qualify for a mortgage right away or once the property is rehabbed at reasonable rates, you could refinance it and hold onto it either for a few years as a rental or rent-to-own and then sell it, or you could hold onto it for the long haul and maybe pull equity out if it appreciates.
That's about it.
Thanks for that response Larry. I feel the same way about it. I mean how many "exit strategies" could there be. Either sell, lease, or hold on to the property. What other options are there?
I know some people on the commercial side can force appreciation on the properties, to be able to pull out that equity to leverage for other purposes.
It's a little disappointing to hear the "exit strategy" as easy as sell, lease, or hold. Those are strictly "what" answers. The difficulty is in finding and deciding on the "how". Unforeseen things happen during different phases and may force you into one or another. It's the savvy and well prepared investor who comes out on top.
Wholesaling exits aren't simply a "assign" or "double close" only option. Be creative. How about forming an LLC and selling said LLC with the only asset being the property as heard on an early podcast. One of my wholesalers prefers to turn his deals into notes. Sell "as is" under seller financing, enjoy his ROI or even sells the note at a discount later.
These are but a few examples from the wholesaler side. Spend a few hours researching different exit strategies, listen and re-listen to some podcasts, and you will see there are more than 100 different exit strategies. Don't box yourself in, be creative and find something when you think you've hit a wall. good luck fellas
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