What is Your Exit Strategy?

Maximize returns and minimize risk by finding the right exit strategy before you invest!

Having an exit strategy for your real estate investment is a crucial element in the success of a project. An exit strategy is exactly what it sounds like. It is a plan as to how an investor will remove themselves, or exit, from the real estate investment project. Determining an exit strategy can also influence the investment strategy and indicate the particular terms needed for financing. This is all done in an effort to maximize returns and minimize pitfalls.

Not only are well thought out exit strategies a way to maximize success and minimize risk, they are sometimes required in the qualification process when obtaining a loan. Most lenders want to see that the investor has evaluated the potential risks and returns expected from the property to ensure they are funding a project that won’t fail.

There are several different types of exit strategies to consider. An investor may also want to examine factors such as supply and demand, market conditions, location, and financing options in the process of determining the most appropriate exit strategy.

Different Types of Exit Strategies

Fix and Flip - this is a great option for an investor looking to make a profit in a short amount of time. This strategy involves locating a property that is run down and in need of rehabilitation, purchasing the property at a low cost, then improving the home and adding value so that it can be sold at a much higher cost than what it was originally purchased for. Location and supply and demand are two major factors to consider before committing to this type of exit strategy.

Buy and Hold - If an investor is less interested in a quick profit and wants to take advantage of home appreciation while making passive income then buying and holding onto a property as a rental would be a great option. Typically, investors choosing this method as an exit strategy will plan to hold onto the property for 5 years or more.

Wholesaling - This method can be very accessible, however it does require some patience and effort from the initial investor. With wholesaling, an investor would contract a property and almost immediately sell it to another investor who will then search for buyers before the contract with the original investor closes in order to make a profit.

Rent-to-own - This strategy is sometimes referred to as a lease option. In this type of exit strategy an investor purchases a property and then rents it out to an individual for an agreed upon amount of time. After that time has passed the renter can choose to continue making payments towards the eventual purchase of the property.

Regardless of the exit strategy you choose, it is important to understand that there are certain circumstances that could require you to adjust your plans. Consider the factors that may influence your particular project and determine what makes sense financially before committing to your exit strategy.

If you’re looking to connect with other industry experts or are in need of financing for your next investment project, allow CALCAP Lending to be your resource.

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About CALCAP Lending

A division of CALCAP Advisors, CALCAP Lending benefits from the expertise of a seasoned team of professionals with extensive, successful track-records covering a variety of disciplines and leading large, nationally-recognized institutions. A private money direct lender, CALCAP Lending provides short to mid-term financing for property investors and businesses looking to purchase, refinance, renovate, and construct residential or commercial properties.

Lending FAQs

You've got questions, we've got answers.

What is private money lending?

Private money lending is a collateral-based lending strategy that is often associated with shorter terms and more attractive features. A private money loan offers more flexibility than a conventional mortgage or bank loan.

How does a private money loan work?

Private money lenders provide financing using money from private entities. Private money loans often work as bridges to help investors gather funds to achieve their short term real estate goals, but long term, permanent options may also provide.

Why would I choose a private money lender?

There are many advantages to using a private money lender for your real estate investments! Private money lenders can be more lenient when it comes to borrower credit issues, often there are no prepayment penalties, you can leverage your cash to buy multiple properties, and private money loans are quicker when compared with institutional loans.

Can I get prequalified for a loan?

CALCAP has a responsive loan team who are able to prequalify you. Contact a loan specialist at 833.816.5580 to get started.

How long does the lending process take?

Private money lending can be a quick and painless process. From start to finish, 30 days is common, however, turn around times can be as short as 10 business days.

Can I still be approved for a loan if I have bad credit?

Generally yes, we understand that people have temporary financial issues that come up, and we want to work with you to help you rise up financially to a better place. Offsets to credit concerns may include experience as a real estate investor, good cash reserves, and/or larger down payments.

I am a broker or investor, how can I work with CALCAP?

Business is built on relationships. Ours is no different. CALCAP Value and Preferred Partners receive exclusive rates and services. For more details and to submit your application, visit our partners page.

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