Exit Strategies
It is so important to understand what an exit strategy is. You need to know where you are going before you to get started.
While investigating and doing your due diligence on a property, you need to figure out what your strategy for that properly is going to be. Is this one that you are going to hold onto and rent out? Is this one you are going to resell for a profit? You could also plan on trying to sell it for a number of days and then rent it out if it does not sell. Or you could put it up for sale and for rent simultaneously and then which ever happens first is what you would go with. I have worked with hundreds of investors over the years and they all had their own strategies.
They all had a particular area or type of property that they would work with and they all had unique exit strategies. The strategy that you choose is not so important as getting started and knowing that having an exit strategy is part of your due diligence before you sign on the bottom line.
Often times I will have a novice investor ask what their strategy should be. You have to figure out your own strategy. That's right! It is gut check time! You have to face the fact that someone else can not tell you what the best strategy for you would be.
Here are some examples that may give you some ideas on choosing the strategy that is right for you:
Investor #1: My goal is to build an inventory of rental properties, hold onto them for 10 years, then sell off half of them to pay off the other half. That way I have several properties free and clear for future income in retirement.
Investor #2: I buy only houses North of a certain street, I buy only homes that have been on the market for more than 200 days, and I buy only homes that are brick.
Investor #3: I like to specialize in a particular neighborhood. I buy 2 homes within 30 days of one another. I then fix them both up. I sell one of them. The other I hold onto for long term.
Investor #4: I buy only properties to rent out because the cost of getting a home "rent ready" is cheaper than getting a home ready to resell. I plan on holding onto the properties forever and passing them on to my kids.
These scenarios should give you an idea on what to make your strategy.
