What does your exit strategy look like?

[holymoly]

What`s in your exit strategy? What do you take into account, and how specific do you get?

I`ve made my first purchase, a single family townhouse in Hamilton Ontario which I intend to hold long term (minimum 10 years) and rent out as a single unit. (I haven`t taken possession yet; it`s currently owner-occupied.) I should have developed a real exit strategy long before now, but everything I`ve come up with just seems very lame, general and obvious. There`s got to be more to an exit strategy than "Don`t sell unless I need the money, then sell for a profit."

I`d appreciate any advice and examples.

 

[EdRenkema]

Congratulations!! Hamilton is a city with many strong economic and geographic fundamentals and its only getting started.

The standard hold period is 5 yrs however this does not mean sell, it could simply be refinance, or sell a downpayment to a JV. There are different reasons to sell, myself I will be selling a property simply because it has seen good appreciation and it is underperforming for cashflow. I might as well have my money where is working harder for me.
Warren Buffet says "put all your eggs in one basket and watch that basket very closely" my take on that is being flexible enough to change my plan as needed.

 

[holymoly]

QUOTE (EdRenkema @ Jun 1 2008, 01:02 AM) Congratulations!! Hamilton is a city with many strong economic and geographic fundamentals and its only getting started.

The standard hold period is 5 yrs however this does not mean sell, it could simply be refinance, or sell a downpayment to a JV. There are different reasons to sell, myself I will be selling a property simply because it has seen good appreciation and it is underperforming for cashflow. I might as well have my money where is working harder for me.
Warren Buffet says "put all your eggs in one basket and watch that basket very closely" my take on that is being flexible enough to change my plan as needed.

Thank you for the congrats!

Given the example you provided, it sounds to me like an exit strategy doesn`t have to be all about knowing exactly what you intend to do at exactly what time... it sounds like it`s as much about keeping a close watch on how things go with a property over a period of time and evaluating whether that property still fits your goals/plans and whether it`s more beneficial at that point to continue as is, sell, refinance, or whatever.

 

[invst4profit]

Your exit stratagy is something you decide before you buy. It impacts how much you are willing to offer, what type of terms you need purchase/morgage wise etc.
The purpose of the plan is to insure you have options when plan "A" renting goes into the toilet so you are prepared.
If it turns out you don`t like being a landlord you have a plan to get out without losing your shirt.
If your property does not appreciate because a half way house for Ex cons or handy capped extended living sets up next door how does that effect your plans.
Basicly if you are losing money renting, can`t get the rent you want or can`t rent at all or hate renting what do you do tomorrow with the property.
Holding on until things get better or thinking "I`ll just sell" isn`t always an option.

 

[kboughen]

QUOTE (holymoly @ May 31 2008, 11:45 AM) What`s in your exit strategy? What do you take into account, and how specific do you get?
I always think "Exit Strategy" before I purchase a property, but that doesn`t mean I determine exactly what I will do and exactly when I will do it. I like options, so I always consider how many acceptable exit options a specific property offers, for example;

• Are the results of my Goldmine score card good enough that other investors would be interested in purchasing it should I want to sell to an investor
• Is the property`s location and other attributes desirable from an owner/occupied view point should I want to sell it that way, or exit through a Rent-To-Own strategyIs there enough cash flow potential that I will want to hold the property after I reach my Belize for passive income

Any one property does not have to meet all the above for me, but I must be comfortable with the options it provides.

 

[RedlineBrett]

If you are looking to partner up with someone and offer them a share in exchange for capital you need to define a timeline for when they can get out. Five years is the most common, but it totally depends on the appetites of the people in the deal.

Other than that - if the deal is good now generally speaking it will be a good deal 3, 5, or 10 years. So what you do with it then is completely up to you and the needs of your business.

QUOTE (holymoly @ May 31 2008, 09:45 AM) What`s in your exit strategy? What do you take into account, and how specific do you get?

I`ve made my first purchase, a single family townhouse in Hamilton Ontario which I intend to hold long term (minimum 10 years) and rent out as a single unit. (I haven`t taken possession yet; it`s currently owner-occupied.) I should have developed a real exit strategy long before now, but everything I`ve come up with just seems very lame, general and obvious. There`s got to be more to an exit strategy than "Don`t sell unless I need the money, then sell for a profit."

I`d appreciate any advice and examples.

 

[JohnS]

QUOTE (holymoly @ May 31 2008, 11:45 AM) What`s in your exit strategy? What do you take into account, and how specific do you get?

I`ve made my first purchase, a single family townhouse in Hamilton Ontario which I intend to hold long term (minimum 10 years) and rent out as a single unit. (I haven`t taken possession yet; it`s currently owner-occupied.) I should have developed a real exit strategy long before now, but everything I`ve come up with just seems very lame, general and obvious. There`s got to be more to an exit strategy than "Don`t sell unless I need the money, then sell for a profit."

I`d appreciate any advice and examples.

Your exit strategy can also include things like thinking about what society will be like when you`re selling. If you plan on selling in about 5 years, a lot of people believe that a shift will be starting in the RE market, as boomers transition to a new phase in their life. So, would your property be suitable for boomers? (In an area that`s good for lifestyle, is it a bungalow or condo, with no stairs, etc.)

As an example, mine is horrible for boomers. However, it`s right beside a major government complex, and would make a great starter house for someone from the echo generation. They`re used to rolling out of bed and into class, and now they`d be rolling out of bed and into work. It`s small, so it wouldn`t work for someone with a family, but someone who`s single, or a couple with no kids would like it. So, when I go to sell, that`s who will be my main target demographic - young, fairly fresh out of school, no kids (or at most one), and a government worker.

There`s more to my rationale, as well, but those are a couple of the key points.

Have a good one!

JohnS

 

[holymoly]

A lot of good insight and information! I`ve got a much clearer picture now of what an exit strategy can entail. Thanks everyone!