By Chris Parks
Real Estate Investors are often tasked with knowing his/her exit strategies before getting into a particular situation. It is important to remember that exit strategies will be different depending on what type of investing you plan on doing.
One particular difference is whether you are planning on holding a property long term (as a rental) or if you are planning on making money as soon as possible.
If a property has little or no equity, holding long term will generally give you more options then if you are looking for short term exit strategies. And then it depends on how much the mortgage is vs. how much you can get for rent and how much your expenses are. Also, how much money you are willing to spend and whether or not you are willing to go negative in terms of cash flow (which I do not recommend, but know many investors who will).
If you are looking to get in and out of a property quickly, then properties with little or no equity would not be the way to do it unless you or investors you know work short sales or are interested in buy/hold like I explained in the previous paragraph. If this is the case then you can pick up bird-dog fees all day long by referring these types of properties to real estate investors who are looking for them.
Always ask around at your local REIA meetings to see which real estate investors are buying properties with little or no equity and find out what exactly they are looking for.
A property with a lot of equity generally gives investors the most options, especially if it needs work and provided the seller needs (not wants) to get rid of it. Of course a real estate investors' overall purchase criterion needs to look at more than just equity.
There are a lot of different ways to make money in Real Estate. You can bird-dog properties, wholesale properties and/or rehab them as well. Investors often make the most money rehabbing properties from sellers who need to sell. Many of these types of properties can be major fixer-uppers, or condemned properties that have equity.
As a rehabber, the very bottom line for quick-cash is this:
- Buy low
- Improve
- Price it to sell quickly (especially in today's market)
- Deposit your money
That being said of the three, rehabbing is not the quickest way to profit and by far much more involved. Real Estate Investors who know his/her exit strategies before putting any property under contract will have the most flexibility and thus the most choices.
About the Author:
Chris Parks is a member of a small group of Real Estate Investors and Entrepreneurs who created Real Estate Investing for Newbies http://www.REIforNewbies.com in order to teach and assist new Real Estate Investors in a step-by-step and easy-to-understand manner.
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