Whenever we buy or start a new business, we ask ourselves, “What is our exit plan?” What do we ultimately want to do with the business we are getting into? How can we sell all or part of it to make money? You should always ask these same questions about the real estate you buy. What is your exit strategy? Do you intend to hold the property long term?
Do you plan to fix it, rent it, and then sell it? If so, who is your target buyer? Are you buying the property “wholesale,” with the intention of selling it quickly? If so, to what group of buyers do you want to sell it, and how will you market it to them? Is there something unique about this property that you can use to create additional value? Is it more valuable in small pieces? These are very important questions, yet surprisingly few people answer them before buying a property
We encourage you to ask yourself the tough questions early and to have a game plan (including what might be called an “endgame plan”) for each property. True, all game plans are subject to change (and may even get scrapped entirely), but you’re always better off starting the game with a well-thought-out plan and then adjusting it as necessary. Are you going to keep this property forever? Probably not. So if you’re going to unload this property at some point, you need to know how to sell it to produce the maximum return on your initial investment.
Most real estate books and seminars focus almost exclusively on how to buy property, rather than on how to sell it. And, yes, how you buy property is very important. But if you don’t know how to sell your investments, you are likely to give up some of your hard-won profits unnecessarily. Conversely, if you maximize what you make on each deal, you’ll have to find fewer good deals to make the same amount of money—and at some point in the investment cycle, it gets harder and harder to find good deals.