Are You Structuring Deals Around Exit Strategy or Just Chasing Cash Flow?

Question

To my landlord colleagues here, are you buying based on cash flow, appreciation, or a specific exit plan?Would love to know how other landlords are positioning themselves in today’s market.

Jasper Jurman · Answer

Hi Frankie,

Great question! I think you should always be structuring deals around an exit strategy as it sets a goal and then you can work backwards from that goal or exit strategy which helps me create a framework for how to get there.

I am always looking at cashflow when buying but after adding value to the property I don't want to be over leveraged so I want be all in for 75 cents on the dollar. In this case the refinance after the renovation would be my exit strategy. I hope this helps! Happy to chat more.

Ryan Spath · Answer

When I first started I had no idea what I was doing. Bought a house to live in, had to move for work and ended up renting the home (what a blessing that turned out to be) When I became more intentional we purchased homes to live in and to convert to rentals after move out , we knew this was an appreciation play. We have also bought in a out of state market that has better cash flow. We are buy and hold investors, so we would chose not to buy in C, D, F neighborhoods.

In my market today in Boise, to make any acquisition it is likely an appreciation play…

Joel Miller · Answer

Cash flow is always a big consideration in the sense that I would never buy a property that was projected to have negative cash flow beyond a short time for rehab and stabilization. Initially, 48 years ago when I got into this, I bought more based on cash flow rather than appreciation. But in later years I made sure I was buying better properties with appreciation potential. Exit strategies were not as much of a concern because I was buying for the long haul, but basically I wouldn't buy a property that would be hard from me to sell or refinance whenever I wanted.

Are You Structuring Deals Around Exit Strategy or Just Chasing Cash Flow?

Most Popular Reply