How do you know which exit strategy to use?

Question

I’ve been on BiggerPockets for a little over two weeks now, and I can honestly say I’ve learned a ton already and made some great connections. Lately I’ve been spending a lot of time analyzing deals, and I can feel myself getting better at it but one thing I’m still trying to wrap my head around is choosing the right exit strategy.

For example, when looking at flips are you all targeting a specific cash-on-cash return or margin? And if a deal doesn’t quite hit that threshold, do you then pivot and see if it works better as a BRRR?

I guess where I’m getting stuck is understanding when you decide on the exit. Are you going into a deal with a strategy already in mind, or are you underwriting multiple exits and letting the numbers tell you what works best?

Also, I know about BRRR and flips, but I’m aware there are a lot more strategies out there that I haven’t fully explored yet. What are some of the main exit strategies you all consider when analyzing a deal?

Appreciate any insight, just trying to build that pattern recognition early and avoid boxing myself into the wrong approach.

G. Brian Davis · Answer

Pick the exit strategy before you buy. Your Plan A should be clear going in, but you should still underwrite Plan B and Plan C before making an offer. For example: flip first, BRRR second, long-term rental third. Do not assume a weak flip automatically becomes a good BRRR. It still has to work after realistic rehab costs, refinance terms, rent, vacancy, repairs, management, and reserves.

For flips, your margin needs to be strong enough to survive mistakes. For rentals, your cash flow needs to survive conservative assumptions. The numbers should tell you whether the deal works, but your exit strategy should not be a guess after closing.

Dominic Mazzarella · Answer

That approach makes sense. From experience, I always start with my preferred exit in mind before even crunching numbers, usually flip or hold, depending on the market and property condition. Then I run worst-case scenarios for other exits just in case. A deal that barely clears on flip margin rarely turns into a solid rental without changing the scope or lowering purchase price. Also, don’t underestimate rehab surprises and holding costs, they can wreck a carefully planned flip margin. Watch local enforcement or code violation trends too; sometimes those flags can signal motivated sellers or overlooked rentals. Ultimately, your underwriting should be conservative enough to pivot but clear enough so you’re not stuck without a plan post-close.

Korey Ralston · Answer

That makes a lot of sense the way you explained it. I’m still working on getting to that level of discipline—I tend to focus on whether the numbers look acceptable, but I’m not always defining a clear exit strategy upfront like that.

The flip versus hold decision is something I haven’t fully refined either. I’ve probably relied too much on the idea that a deal can just convert into a rental if needed, without fully validating whether it actually works under those assumptions. And to your point, I’m sure I’m not being conservative enough with rehab and holding costs—they seem easy to underestimate until they start impacting margins.

The note about code enforcement is especially helpful. That’s not something I’ve really considered as part of my evaluation process. Overall, it’s clear I need to be more structured with underwriting and more deliberate about planning exits before moving forward.

Denise Supplee · Answer

A few common exits to consider are flip, BRRR, long-term rental, mid-term rental, short-term rental, wholesale or assignment, or seller-financed resale. The best deals usually have more than one safe exit, but you want to know those exits before closing.

Korey Ralston · Answer

That’s a really clear way to think about it—I like the idea of locking in Plan A but still making sure B and C actually work before jumping in.

I think where I get a little stuck is knowing what strong enough really looks like on the numbers side. Like for a flip, what kind of margin are you usually aiming for to feel safe if things go sideways? And on the BRRR side, are you looking for a certain cash-on-cash return or monthly cushion after all the conservative assumptions?

Just trying to get a better feel for what benchmarks people actually use vs. what looks good on paper.

Michelle Pepe · Answer

@Korey Ralston if the value is high enough I'll take break even, but I go for at least a few bucks of cash flow, just to cover inevitable tax and insurance increases. The more the merrier tho lol

Korey Ralston · Answer

That actually makes a lot of sense—I hadn’t really thought about planning for two exits like that, but it seems like a smart way to protect yourself.

That example with the market stalling for a couple weeks is kinda wild too… I guess it doesn’t take much for things to slow down. When you run your numbers with the rental as a backup, are you usually still comfortable with the cash flow, or is it more of a break-even safety net?

Also curious—has that approach ever saved you on a deal where a flip didn’t go as planned?

How do you know which exit strategy to use?

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