4 House flipping Exit Strategies ( REICLub.com)

In real estate investing, especially house flipping, almost everyone is focused on entry strategies as opposed to house flipping exit strategies.

Most people are focused on how to find property to flip, how to work with wholesalers, how to wholesale property, working with real estate agents, etc.

Having solid house flipping exit strategies can be a life saver but unfortunately, they do not always guarantee that unfortunate things you hadn’t anticipated might happen. Exit strategies are simply back up plans. So if things do not go your way, you have a plan B.

The feeling and excitement of purchasing a house and rehabbing it is all too familiar. It’s an ecstatic feeling especially when you walk out of the deal with a big fat check.

You should try to figure out your house flipping exit strategy when your deal is already going south. You should have a plan even before you start working on your project. Exit plans do not just apply to house flippers; it also applies to people who buy and hold to sell when the market appreciates or for long term rental income.

House Flipping Exit Strategies

Time and again we have talked about mindset and always thinking positively. But we always emphasize that you should hope for the best and prepare for the worst. Having said that, here are four house flipping exit strategies that you can utilize.

1. Leasing You might come across a buyer who wants to purchase property but they are not in a position to get a traditional loan. They have a steady source of income but are unable to meet the price you want at the moment. Don’t despair. A lease option is a great way of getting clients to agree to your asking price without making them feel like they are going way over their budget. Here’s how it works. You draft an agreement between you and the buyer where the buyer agrees to make a down payment. They then rent the property until they are in a position to purchase it. find out if your lender is willing to extend your loan for a longer term. If not, then you will have to find a financial institution or a bank that will refinance your loan.
   

2. Determine Your Break Even Price Real Estate CalculationsYou should be prepared to lower your price such that you only lose a little money or you break even. Either way, you should not lower your price such that it is ultimately catastrophic to your business. You can think of price reduction strategies by calculating your monthly carrying costs. You should also know the exact date when your loan matures and plan towards it.
   

3. Renting If leasing doesn’t seem like a good option, you can always rent out the property. You can rent it out at prevailing market rates. This can be very advantageous especially if there is a demand for rentals in your area. If your source of financing has high monthly payments, you can lower your monthly costs by re-financing into a long-term mortgage.
   

4. Take The Loss Sometimes you just have to accept a loss if you try all the exit strategies and they do not work. You just have to learn from your mistakes and make better decisions next time.

Big Mistake

Common Investor MistakesThe biggest mistake you can ever make is counting on funds from one purchase to find another flip shortly thereafter. Don’t get it wrong-it’s okay to use money acquired from one flip to fund another one but what if you do not close the deal in time to purchase the next property? This is why you should always have money from other sources to finance your next flip.

Simple vs. Easy??

Simple vs. Easy, the Power of Execution and how to Stop Over-Complicating Everything!!

Do you know the saying “If it was easy, then everyone would be doing it”?

It’s often applied to real estate (and business) by many people, including me.

Well, people often mistake “easy” with “simple”.

See, real estate is often positioned (and sold by gurus) as an easy business.

“Buy low, sell high, make money.”

“Easy” means it doesn’t require much work. Anyone can do it, anyone can be successful overnight.

But when you get into the nuts and bolts, all excited by the possibilities of quick paydays and big riches, with visions of big mansions and yachts and fancy cars that you will undoubtedly be able to afford by next month, you realize that there’s a lot more that goes into this business than you were told.

And then you come to the realization that this business actually takes a lot of work.

What the gurus and the media and the late-night informercials mean when they say real estate is “EASY” is actually that it’s “SIMPLE”, not “easy”.

Easy = doesn’t require much work and can be done by anyone.

Simple = the concept itself is easy to master, though it requires work to bring to life.

“Buy low, sell high” – simple concept, but one that still requires execution and work. Thus – not easy!

“Find a motivated seller, connect them to hungry buyers” – simple concept, but one that still requires execution and work. Thus – not easy!

“Find a house, rehab it, rent it out and collect checks for life” – simple concept, but one that still requires execution and work. Thus – not easy!

The most successful people I know in real estate are NOT the smartest. They didn’t start out wealthy or have fancy educations. They are not the most analytical, or thoughful, or mathematically gifted. They don’t need to be super smart because the concepts are simple.

But they execute ferociously. They are hustlers.

They go deep into one niche, they don’t go wide and try to learn every real estate strategy there is.

They don’t overcomplicate this business – because remember: it’s SIMPLE.

But they realize it’s not EASY and that it requires real hustle and hard work and building REAL relationships.

And it requires execution.

Here’s what I mean and here’s how you must approach execution:

Simple Concept => Execution

So the execution plan would be:

1. Research what cash buyers are buying in what market

2. Go find similar deals and put them under contract

3. Flip the contract to buyers (they’re everywhere – trust me)

This is the kind of execution plan that will make you money out of the gate.

Simple Concept => Targeted Execution => Results

So let’s recap:

If something is easy, it means anyone can do it and there’s probably a ton of competition because the business has no barriers to entry, requires little work, and can be done by anyone.

If something is simple, then the concept is easy to grasp, but the business requires hustle and execution. This makes for a great business because it doesn’t require a business degree, a PhD or lots of money to start, but it requires the one quality that most people lack: ability to execute fearlessly and strategically.

......Daniil Kleyman

Rehabbing to Flip!!!

So here's a quick list of the things that we believe are high-impact improvements. These are roughly in descending order of importance but are all critical. They are the things that you should really plan on improving in order to have the kind of traffic and buyers you will want in the end. Don't cut corners on these, and remember to keep the materials used consistent with most homes in the area:

• Kitchens

• Bathrooms (consider adding or modifying one if there are not 2 full baths per 3-4 bedrooms)

• Paint, both interior and exterior

• Floors (new carpet or finished hardwood in living areas, tile or vinyl in kitchen and bath)

• Landscaping

• Windows (people are looking for energy efficiency in most areas today)

• New heating system

• Central air conditioning

• Absent from the list above are such things as new second stories, garage conversions, porches, etc. We feel that adding quality tends to win out over adding space most of the time.