How To Avoid Deals That Turn YOU Into The Motivated Seller

As an investor, the first couple of deals are scary but as you gain experience, you start to get bolder. You feel like a bona fide investor. You gather the courage and start doing more deals.

But it’s at this point that a new struggle arises – one that risks your deals AND your investing business: you end up doing a deal or two that doesn’t sell. It sits in your inventory, racking up carrying costs.

You start to panic. You get desperate. At some point you find yourself contemplating selling it “at cost” just to keep from hemorrhaging more money.

Almost no investor is immune to this problem…

Maybe you’re a turnkey wholesaler who acquired the property and can’t sell it.

Maybe you’re a rehabber who can’t sell the property retail.

Maybe you’re a cash flow investor who can’t find a tenant.

… whatever the situation, this happens to many investors (maybe most investors?) at one time or another.

The problem is: if you hold these properties in your inventory for too long, the carrying costs mount higher and higher and you erase even the potential for an ROI… plus there’s also the risk that vandals may take advantage of your vacant property and wreck it.

What’s Behind The Problem

Before I explain the solution to the problem, I’ll quote a famous saying that will add some context: “To a person with a hammer, every problem looks like a nail.”

What that means for this post is: new investors tend to think of themselves inside a very carefully defined box. For example, an investor might think, “I’m a rehabber.” Therefore, they only think of the rehabbing model they’re familiar with – perhaps it’s to buy a low-priced property that they found on the MLS, fix it up beautifully, and then sell it for thousands more through the MLS. Nothing wrong with that model but someone who ONLY thinks of themselves as working within that model will only ever see opportunities through the lens of that model. To restate the quotation, “To a person who is a rehabber, every problem with their property is a rehabbing problem.”

Here’s The Solution

There is a solution to this problem – exit strategies. Exit strategies are the methods you use to exit your investment. (Most people think of exit strategies as ways to SELL a property, and this is part of it, but you should think more broadly of exit strategies as a way to profit from a property; in other words, you’re exiting your financial capital out of the deal through a return).

So, when you’re just starting out, you tend to think of yourself as one type of investor but if you can broaden your thinking about possible exit strategies outside of the ones you’re most familiar with, you’ll reduce the risk of properties sitting vacant in your inventory and you’ll increase the likelihood that you can exit your deal profitably.