Hey, what’s going on everybody? I want to continue to provide you with some helpful information as you navigate your real estate investment journey, or maybe you’re thinking about getting into real estate, but you just haven’t pulled the trigger yet. So I wanted to give you some information that, hopefully, you’ll find helpful.
So today, I want to talk about the importance of having multiple exit strategies when you’re analyzing and purchasing investment properties. First, let’s define what is an exit strategy. So an exit strategy is a process or a plan for investors to make their money back and hopefully, make a profit. There’s three main exit strategies. The first is selling the property, the second is refinancing the property, and the third is renting or leasing the property. It’s important to consider having multiple exit strategies available, in case one of your plans doesn’t end up working out. So one of the main reasons for having multiple exit strategies is to protect you against losses if the property doesn’t sell or rent as expected. Now, this doesn’t guarantee you won’t experience a loss, but it does give you options to reduce the risk of a loss.
Let me share an example with you. Recently, we worked on a project, and when we purchased it, our intention was to rehab it and sell it on the MLS. Unfortunately, during the rehab period, the market cooled off quite a bit, and so what we thought we could sell the property for, didn’t end up being what we were able to sell the property for, and we went over a little bit on our rehab expenses. So rather than taking a loss on that property, we ended up listing it for rent, found a great tenant, and they moved in and we’re cash flowing on a monthly basis at that property. Hopefully, the maintenance will be very minimal since we went through and did a lot of upgrades. So that’s a great example of having multiple exit strategies and pivoting as needed to prevent a loss.
So overall, having multiple exit strategies is important to protect you against losses and gain potential profits. It allows investors to make better decisions and gives them the freedom to pivot when necessary. So I encourage you to take this into consideration the next time you’re analyzing or purchasing an investment property.