3 Fast Exit Strategies For Long-term Real Estate Investments
As weve already discussed, part of successful long-term real estate investing is
having an effective way to get out of the investment preferably while generating wealth at the same time. Sometimes, however, you need to get out of a long-term real estate investment fast, which can create trouble for a real estate investor who only planned for a calm, prolonged exit that could happen at their leisure.Fortunately, there are actually a lot of ways to exit a long-term investment fairly quickly in any market. You just have to know how to make your long-term investment attractive to other investors. Sometimes, you can alleviate or even recoup your losses in the process, but remember that any time you are exiting in an unplanned fashion, you may need to make some concessions.
These are all tested and tried exit strategies, but remember that every deal is different. These are things that have worked for me and for my colleagues, but do not misconstrue them as legal or financial advice. This list is for educational purposes only.
Exit Strategy #1: Sell Subject-to
This means that you offer the property to sellers under the terms of the mortgage that already is on the property. This makes the property really attractive because it is very hard to get financing in the current market, and because you can offer the seller a down payment that is less than 20 percent, which is the minimum that most conventional lenders are willing to take right now. You will still often be able to walk away with some money, and you will also be able to sell in a down market without succumbing to foreclosure.
Exit Strategy #2: Offer Owner (thats you) Financing
Owner financing may sound at first like a subject-to agreement, but in this case you get to hold the note on the property until it is paid off. In the case of subject-tos, the new buyer gets the deed much sooner. In this case, you again are able to make an attractive package for buyers in a tough market, and you also can either continue to collect payments keeping any extra interest that you can negotiate for yourself or you can sell off the note for some faster cash if you need it. Owner financing can also contribute to a down payment option in the case of subject-to transactions when a buyer wants the property but cannot pay a large lump sum up front. You can finance the down payment, and foreclose on the deal effectively taking the property back if they fail to make the entire down payment.
Exit Strategy #3: Lease-Options
If you are having trouble selling your property outright, a lease-option can alleviate stress on your budget and potentially get it off your hands entirely. In many lease option agreements, a portion of each months rent goes toward a larger payment made to you at the end of an agreed term. This is good because it will help keep your payments current, and you can set a price for the property in the future that must be met in order for the tenant to gain possession of the deed to the property, but also allows both of you some flexibility when it comes to the deal in the future. Peter Vekselman has been successfully investing in real estate since 1996. He has completed over 1200 real estate deals, owned a construction company, been a private lender, and owned a property management company. Peter currently works with clients all over the US helping them achieve riches in real estate investing. For more information please visit www.CoachingByPeter.com.
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