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Why Formulating Short Sale Exit Strategies Is Important Even Before You Begin The Investment Game

Oct 11, 2007
Strange but true, you can actually find and exit opportunities in investments even before you commence them! Speaking in business terms, formulating short sale exit strategies in real estate investing is essential before carrying out the first deal.

Given below are certain exit strategies that you should know before you carry out your first deal.

. Wholesaling- Wholesaling is carried out when someone purchases a property, which needs to be extensively repaired, and then reselling the property to someone who wants to carry out those repairs. More often than not, this approach acquires the lowest return, but, it is the also has the fastest turnaround.

. Holding as Rentals- If a house needs only a little sprucing up, it would be enough to turn the deal into a profit. However, you ought to know that this exit strategy is not apt for you if you don't wish to be the landlord, or you lack a positive cash flow.

. Reselling Outright- Many people opt for reselling outright. In such cases, a general rule of thumb followed is trying to negotiate the price for no less than 75%-80% of the original ARV. If not, you may be unable to get sufficient returns when you sell the property. You will have to recover all the holding expenses that you bring upon yourself while waiting to sell the property.

Given below are some significant factors that prove that formulating an exit strategy is advised before real estate agents begin the negotiation process:

1. Everyone has certain moral principles to abide by, so do real estate agents. Even though real estate gents are mostly concerned about their profit, they should consider that homeowners are handing over part of their well-being. No one is keen on putting a family or individual at risk. Hence, if you are a real estate agent, it is necessary that you have a certain plan of action before take on any responsibility.

2. Another reason is that after you acquire the acceptance letter you have a limited amount of time to work. Don't forget you also have to work on your next deal, prepare a house for sale and there is hardly any time to design the exit strategy. Don't be reactive but proactive.

3. Last but not least, if you predetermine the exit strategy before time, you can easily close the deal for greater profit within 45 days at the most. There are chances that the deal may fail because of inadequate preparation.

Always make sure you have a better understanding of the deal and understand the possible earnings. Take some time off to gauge the digits on the basis of the exit strategy you use. Don't forget that not every exit strategy reaps the same profits.

Eventually, you may find that even though you can negotiate the short sale it may be futile. You might just not acquire sufficient profit after exiting and on the other hand a particular deal might be too risky to invest in.
About the Author
Real Estate Investments are easy if you follow the 4 step program. Do not be scammed by Real Estate Investment Guru's. Our program is free. http://www.realnetusa.com.
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