Best Exit Strategies To Practice in Real Estate Deals

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Best Exit Strategies To Practice in Real Estate Deals

An exit strategy is a predetermined way for a business professional to complete a current deal or situation they may be operating in. It’s a great objective that enables a real estate investor to mitigate losses and manage profit margins.

So, what are the best exit strategies to practice in real estate deals? Let’s explore some exit strategies to assist you in your real estate venture.

Wholesale

A common exit strategy that many investors utilize is the wholesale strategy because it’s usually risk-free and easy to learn.

It requires you to secure a lower-priced property from someone looking to sell the property quickly and find an interested buyer to purchase it at a slight markup. This technique essentially enables you to be the middleman in the transaction, saving you time, money, and effort when turning a profit.

Rental

If the seller is hoping to hold on to the property until a more opportune time, you might consider renting the property out to tenants at a price similar to a home.

One benefit of renting property is that you have limited responsibility in managing the property. However, keep in mind that the seller still owns the property, so you may not have as much control over it as you’d prefer.

Repair and Flip

House flipping is a great way to work in the real estate industry while working with your hands and other creatives. It’s also an efficient exit strategy that can help you turn a high profit.

The fix and flip strategy involves obtaining a property that needs repair at a price below market value, renovating it, and selling it for profit.

While this is similar to the wholesale strategy, the main difference is purchasing the property to repair and upgrade it to flip back for a profit. Many real estate investors benefit from flipping three types of foreclosed homes.

Before acquiring the property, you’ll want to calculate your return profit based on the 70% rule. This rule states to pay less than 70% of the ARV (after-repair-value) minus the cost of repairs you need to renovate the home.

The above best exit strategies to practice in real estate deals are great ways to ensure you enter an agreement knowing how to make the highest profit you can make. Keep in mind that each real estate investment will be different, so you might need to change up your strategy with every situation.