…Know your exit strategy
Most focus on how to buy a house (entry strategy), as an investment, while few focus on what to do with it later (exit strategy), when they’re contemplating the purchase. Begin with the end in mind.
Examples of exit strategies:
Generate cash fast (very short-term) with minimal investment | Wholesale it – buy, market and sell to rehabbers as quickly and cheaply as possible
Generate large sum in near- to mid-term | Buy, Fix, Sell: Buy, add value by providing above average renovation, market and sell to higher end buyers (if market permits)
Generate moderate sum in near-term | Buy, Fix, Sell: Buy, add value by doing light to moderate repairs, market and sell to the masses, using ultra-competitive price
Create self-funding asset while providing additional monthly income over long-term | Buy, hold and maintain property, occupy with renters
Create self-funding asset while using for personal use |
Buy, maintain, upgrade as desired, occupy with renters and use for personal use as you see fit
It’s also wise to have a plan B to your original exit strategy because thing change and don’t always go as planned.
What’s in your Plan A (and Plan B)?