Make sure you're
using 2 or 3 exit strategies
Real estate investors who jump in with both feet and buy a
home inexpensively might think they've got a great deal. But they don't.
Technically, they don't have a great deal until they can turn around and make
money on that property.
Making money on owned property is called "exiting"
and there are numerous ways you can do it. Before you buy a property you should
make sure that you have 2 or 3 different exit strategies in place for various
circumstances. Here are a few options to consider:
Exit strategy #1 –
Buy and hold: When you buy a property and hold it, you are waiting for it
to appreciate. This was a strategy when house prices were climbing, although
many investors don't feel like this is going to happen any time soon. However,
buying low right now might be the best choice if you feel that house prices
will climb again in the future!
Exit strategy #2 –
Landlording: Although you're not technically exiting from the purchase of
the property, you are still benefiting from ongoing rental revenue so it is
included in an exit strategy.
Exit strategy #3 – Flip:
If you want to earn fast cash, flip the house to another investor or to a
landlord. When you do this, you probably won't charge full market value for the
home but instead offer it at a discount so that someone else can buy the house
and do something with it while you walk away with a small profit.
Exit strategy #4 –
Sell: Even though the market is in rough shape, people are still buying
houses. You can buy your home at an inexpensive price and resell it for full
market value to consumers.
Don't go into your real estate investing without thinking of
at least 2 exit strategies for every home. By considering more than one, you'll
be able to be flexible should you find that the market shifts unexpectedly.
Mix and match the exit strategies – for example, buy the
home, landlord it for a while, then flip it over to a landlord who might
appreciate getting a home with tenants.
Having exit strategies will help you feel more confident
during your investing and will ensure that you are more likely to earn an
income from your effort.
For more information and our Investing with the Stars 10 CD Series go to: