You would think that with all the foreclosures and Real Estate Owned properties available and all the seminars springing up on how to by foreclosed properties, that more property investors would be savvy to what to do with the properties they already have or want to buy.
I know from experience, I use to do Fix and Flip, how easy it has been to buy properties, (Little or No Money Down,) but because I help investors finance properties, I still find it amazing that those I meet for the first time never mention an exit strategy for the properties they already own or for the property they intend to buy.
Buying investment properties is not un-like buying a commodity. Unless you have unlimited financial resources or even if you do, you should know when to buy, when to hold, and when to sell. Here are some simple questions to ask when considering investment properties...
- When to buy: Is the property below market value, in a good neighborhood, and does it need minor repairs so I can get my initial cost back?
- When to hold: Has the property equity market slowed down and would it be best to rent or offer a lease option until market values pick up?
- When to sell: Have I reached my intended value return on investment (5% - 10% - 15% - 20%) and now time to liquidate, to buy something else?
Now this may be over simplified but investment properties do carry a risk so sometimes a simple strategy is better then no strategy at all.
I learned the hard way with my investment properties, by not having a exit stratigy, which only experience can teach.
Investment properties are here to stay for a long long time but it is still a good idea to Know when to Hold Them and Know When to Fold Them.