Exit strategies – part 1

Here is the scenario: ARV = $85,000, $10,000 = repair, sale price = $42,000 with a 30-day CASH. In this case is looking for investors to big deal for a quick profit by $8000-$ 13,000. You have some of the strategies and options.

Fix and flip with hard money: moves the market in the area, investors could try to finance it with a hard money lender (5-7 points, and 14% of the shares). In this scenario, the investor will pay an additional $5000 or more in the interest and closing costs around $2000. This brings the total cost to $59,000 ($ 42 K + $10 K + $5 K + $2 K) with a potential profit of $26,000 ($ 85 K – 59 K). The investor would have to man the repairs quickly and call the property back on the market. When a real estate agent is used to sell the property, the potential profit would be about $ 20,000 ($ 26 K – 6 K in commissions). Before selecting this exit strategy, the investor would have to sell a reasonable expectation the House quickly. This can mean to cut, so the potential gain the asking price and increase the risk. This exit strategy is probably not the best choice for this property.

Fix and flip with a private lender: these deals make extremely profitable with private money. In general private provide to lenders you less than 8% interest in costs appropriate to the operation. In this case, a private creditor 55,000 offers $ for the purchase, repair, transaction costs, and all holding costs. If this money is used for six months, the interest is @ 8% only $2200. This brings the total cost basis $57,200 and a potential profit of $27,800 ($ 85 K$ 57, 200). The investor must once again evaluate the market and determine whether a reasonable expectation, a timely sale at or close to the asking of the price to make. This is an example of why you really need to create a network of private lenders.

Fix and flip – retail sales: this one is unlikely on the basis of negotiated 30 days closure, that work well. It would have been possible if the investors include a 90-day or an option is used, the property control had negotiated. In this scenario the investor markets the property to a list of first time home buyers. He sets the price below market value, let’s say $80,000. Advertises the investor, which will be matched for the first time with a full price offer within 30 days home buyer credit. The investor has announced that the new owners have the option, select colors and countertops (something that required replacing). This brings the cost basis to $ 60,000 ($ 42,000 purchase, $10,000 in repairs and $8000 tax credit match) and the retail price of $80,000 is a potential profit of $20,000. The nice thing is, that the repairs after the close will be only done. The buyer has a new home, the equity capital of $13,000 integrated and gets a review of the Government for $8000 to do to provide more updates or new home. The retail sector requires this exit strategy buyers a little longer than 30 days and a list.

Stay tuned for part 2 of this point where we will look at some other options which can be used in this scenario. Please terlassen you have your comments suggest you other options there.

Dana is J Executive with a strong history of success in the boardroom and business circles. Dana brings strength of knowledge and success in sales and marketing. Dana J. Lange specializing in B, C class apartment complex with 100 + units in emerging markets. He provides the strategic and analytical skills to find undervalued properties, significant returns for investors.

Dana J. Lange invites you to learn, high and are even infinitely in commercial real estate invest earn with a group (in money, you have used, sitting in pathetic CDs at 4% or less) If you want an item select America’s # 1 be real estate network today! Join us for an upcoming educational presentation online to inform or to now start.