One of the most important things any real estate investor needs to know when he buys a property is what he plans to do with the property or his “exit strategy”. As the saying goes, “You make your money the day you buy the property”. In most cases, it will be very difficult for any investor to make money on any property if he pays too much for it initially. Whether you plan to wholesale the property, rehab it and then sell it or do a little fix up and keep it for a rental, you need to know your exit strategy right from the start. You will also need different amounts of cash on hand for the different strategies. Here are some tips for choosing your exit strategy.
How Much Money Do I Need To Close A Deal?
How much money you will need will depend on your exit strategy as a property investor. It is always wise to have at least two exit strategies for the property to fall back on. The “exit strategy” is what you plan to do with the property after you have purchased it. Some are short term strategies, and others are long term strategies.
Exit Strategies for Property Investors
- Buy, renovate and sell (short term).
- Keep the property for a rental (long term).
- Flip or wholesale the property to another investor (short term).