Do You Know Your Exit Plan?

Real estate exit strategies are plans in which the investor intends to remove himself or herself from a real estate deal. The decision to implement a sound exit strategy is crucial to success, as the correct approach will ensure maximized profits and minimal risks.

All too often, beginner investors fail to realize the importance of educating themselves on proper real estate exit strategies. An exit strategy is important because it not only guides an investor’s decisions throughout a given deal but also dictates how they will maximize profitability. While the speed of implementation is of the utmost importance when attempting to facilitate a transaction, do not attempt to initiate a deal without evaluating potential exit strategies.

As an investor, it is critical to evaluate each scenario with the end in mind. That is, have a specific plan for each house before you purchase it. Investors should have a clear understanding of how they intend to profit from every real estate investment before they even meet with a prospective seller.

Familiarizing yourself with each individual real estate exit strategy can save your business thousands of dollars, if not millions over an entire career. It is never wise to consciously enter into negotiations with a seller without knowing how you will be exiting from the deal. Not only will blind ambition increase risks, but it will eviscerate any potential chance to negotiate from a position of power.