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5 Best Exit Strategies for Property Investors

exit strategies for property investment
Investment strategies / Learning Strategies

5 Best Exit Strategies for Property Investors

Key takeaways:

  • 5 proven property exit strategies that can minimize your investment risk and maximize your profits.
  • Learn from the best real estate property investment courses to make the right decision.

As of March 2024, the UK’s annual inflation rate was 3.2%, the lowest since September 2021.

However, history suggests change is the only constant.

Previously, the UK’s cost of living increased in 2021 and 2022, with inflation hitting 11.1% in October 2022, the highest rate in 40 years.

With high inflation, it becomes difficult to invest in real estate, mortgage rates rise, and home sales fall.

The last thing you want is to get stuck with a real estate property you no longer want and that’s losing money.

So, what is your escape path?

Having a planned property exit strategy in place. 

Let’s explore the depth of these real estate exit strategies.

5 Best How to Exit a Property Investment Strategies

Knowing the rest of the estate exit strategies is about knowing when and how you can cash out and book your profits. 

You might think that selling your property simply is the best option, but that’s not the only way.

Let’s explore the top five property exit strategies to remove yourself from the deal.

1. Sale of the property

The most common existing strategy is to sell your property for cash

You can liquidate your position completely and book in your profits or losses based on the market situation. 

But to ensure you book your profits and avoid losses, associate with a professional real estate agency for proper guidance. 

Because, who doesn’t like profits, right?

We recommend you take a short-term fix-and-flip or long-term buy-and-hold approach to book decent profits with your property sales. 

If you choose a long-term approach, it relies on property appreciation over time with positive market sentiments. 

But what if the markets are not performing well and the situation is topsy-turvey?

Then, you can proceed with a short-term fix-and-flip, in which you manually add value to the property through renovations and then sell it at a premium.

Irrespective of the approach, you can sell once you achieve the profit margin you want.

2. Offer seller financing

Chances are you might not attract the right buyer for your property because of multiple factors. 

So, what to do?

You can consider offering seller financing.

What’s that?

It means lending money to the buyer on your behalf. You can act as the financier to the buyer, which can help them avoid traditional mortgage lenders.

The buyer can make monthly payments to you based on the decided terms and conditions beforehand. 

Seller financing can ensure you attract the right buyers and generate regular interest on the home loan. 

The real estate exit strategy is a creative technique that creates a win-win situation for both parties.

Insight: Review credit history, and debt-to-income (DTI) ratio, income of your potential buyer similar to the bank. If you skip the step, you may take on a buyer who has a higher loan default risk.

3. Conduct a 1031 exchange

A popular way to exit a property investment is to conduct a 1031 exchange.

It seems like technical jargon, right?

It is a simple tactic used by real estate pros in which you swap one property for another to bypass the capital gains tax. 

You must find a similar property of equal or higher value within a specific time frame for selling the original property. 

The strategy is highly effective and can help you strengthen your investment portfolio with more money. If you perform 1031 exchanges multiple times in a row, you can indefinitely avoid paying capital gains taxes.

4. Refinancing 

A great alternative to selling your property is to refinance your existing mortgage. 

So, where’s the exit?

It isn’t a hard exit strategy, but it can help refresh your investment. 

How?

You can refinance your current mortgage with a new loan, which may offer:

  • A more favorable interest rate 
  • Shorten the loan period
  • Switch the type of mortgage 
  • Decrease the total loan cost

By refinancing your mortgage for more than the remaining balance, you can access some of your home’s equity through a cash-out refinance. 

The extra cash can be used for property renovations or other investment opportunities, such as employing the buy, rehab, rent, refinance, repeat (BRRRR) strategy. 

Also, the equity withdrawn is not taxable. 

If you opt for a home equity loan or line of credit (HELOC) and use the funds for property improvements, the interest paid on these loans may be deductible as a landlord tax expense.

5. Wholesaling

Wholesaling is a strategy for exiting a real estate deal by securing a property under contract and then selling that contract to another investor. 

You don’t have to own the property itself. 

You can hold a purchase agreement that you transfer to another buyer for a fee who acts as a middleman between the seller and the buyer.

Being a wholesaler, you can earn about 5–10% of the property’s total price. 

For example, on a $500,000 property, the fee could range from $25,000 to $50,000. 

While not the most profitable form of real estate investment, wholesaling can effectively accumulate capital for more significant investments.

Apart from these exit strategies, you must be aware of multiple aspects of real estate investing.

But from where do you acquire the required knowledge?

Enroll in Cash Flow With Property Courses

If you want to start your journey towards successful property investment in the UK, you can trust the knowledge provided through all Cash Flow With Property courses.

With expert guidance from Peter and Istvan, you can learn powerful strategies like Rent to Rent and Deal Packaging, even if you’re starting with little to no capital. 

Join our community today and access our free courses and exclusive Facebook group to accelerate your growth in the property market.

FAQs

How can property investors in the UK maximize their returns when implementing their chosen exit strategy?

Property investors in the UK can maximize their returns on exit strategies by carefully timing their sales to coincide with market highs. You should also ensure your property is well-maintained to attract higher bids.

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