Types of Exit Strategies
There are many ways to exit strategies.
We listed 4 types of exit plans below.
2. Sell property when it becomes too old
3. Tear down too old building and just sell the land
4. Tear down too old building and build a new rental property
1. This is very common exit strategy of all. Sales price may be cheaper as the property has gotten older which decreased the value. But sometimes property sells at the higher price than you expect.
2. This is not really an ideal exit strategy. It is more like the result of not treating your property good enough. Your property could have sold at higher price if you had done necessary repairs to keep its value high. Sometimes you are going to have to sell your property at the price that is cheaper than the price of the land.
3. If the land holds good value, it may sell at high price. Your customers this time would be not only limited to real estate investors but also real estate companies who want to build a residential house or a commercial shop on it.
4. This is recommended to who has land in a good location. You may be able to get a loan by setting the land as the collateral asset and your new built apartment would become a great cash making machine.
However keep in mind that it would cost a lot of money before cash flow gets generated from investment and the plan tends to be long.