DEALING WITH DETOURS

The Power of Plan B

It doesn’t matter what business you are in, it’s always smart to have a Plan B. If there’s one thing that’s certain in life and in real estate, it’s that things change. Your goals may change, market and neighborhood dynamics can change, and unforeseen events can put your plans into a complete 180.

Savvy real estate investors love deals that have multiple potential exit strategies. Lenders love when they pledge capital to fund a project that has multiple exit strategies. It dramatically reduces risk and increases odds of success.

What are your exit strategies and alternate options in case you can’t flip that house on the schedule you planned? Or what if that long-term hold is impacted by outside factors? What detours can you consider to minimize the downside of the deal?

Ten Detours to Take When Things Don’t Go as Planned

1.Wholesale the property as-is.

2.Clean it out and sell it as a handyman special.

3.Bring in a partner.

4.Rent instead of selling it.

5.Lease it out short term, via Airbnb.

6.Convert condos to rentals, or rentals to condos.

7.Renovate instead of wholesaling it.

8.Offer seller financing or lease options.

9.Rezone the property to match the highest and best use.

10.Refinance.

Important Considerations for a Successful Venture

Consider where you really want your real estate investing to take you. Even when faced with a detour, real property is an asset—especially when it’s funded correctly. Every property requires the right amount of time, skills, and funding to be successful. Map out your Plan A. Where do you want the property to take you (in terms of short- or long-term profits) and how do you want to get there (the best exit strategy)? Consider the potential detours you could face and then consider alternative routes. Different strategies get different results, and the steps for each may be very different—but being prepared for twists and turns will make you a more nimble investor who can take advantage of multiple opportunities.

TAKEAWAYS

What are some alternatives when a fix and flip takes a wrong turn?

How can you remedy a rental that isn’t performing?