Are you standing at the crossroads of moving on from your investment properties? I have been at that place on the road recently with some of my own investment properties. Having planned my investment "road-map" with an exit strategy made the process smoother and more profitable. Commercial real estate investment expert Kenny Estes' recent article, Exit Strategies: How Does it All End?, can lend you a hand in deciding which path to take with a focus on the destination.
Consider four real estate investment exit strategies:
Pour the gas on: buy, buy, buy to expand your real estate investment portfolio...
It’s a strategy with pluses and minuses. A plus being increasing cash flow. A minus is the bigger your business gets, the more of your time it takes. Estes notes “…[there's] no rest for the weary. Even if you hire employees, you’ll need to watch them and make sure things keep rocking.”
Sell your properties to someone looking for a commercial real estate investment...
This is the traditional real estate investment exit strategy. Estes advises that if you sell every property, you’ll do just fine.
Count on real estate commissions and other costs to eat up 8% or so of your big payday. And, if you sell too many properties in a single market, you can watch values head south fast.
Sell your real estate investment portfolio in one piece...
Estes thinks it’s a possibility — with some conditions, saying:
“…if you don’t want to spend eons selling properties piecemeal, you could try finding an investment firm to buy the entire portfolio. This strategy relies on having good connections, a large enough portfolio, and strong returns. How many hedge fund managers do you know?”
Even if you do go this route, be prepared for every player to take a piece of your profit. You’ll start with a real estate investment portfolio, and you’ll end with a pile of cash…just less, perhaps, than you’d planned.
In fact, Estes thinks you can count on it, adding: “…the investment firm will want a bargain. The price they’ll agree to will be lower than selling each property.”
The fourth approach is going public...
Not recommended for the faint of heart or those with more modest real estate investment portfolios, You should be prepared for a professional services bill in the seven figure range.
Whether you’re getting ready to exit the market and sell your real estate investment portfolio, or you’re just getting started, call the professionals at Kernor’s LLC. We’ve been growing and protecting our clients’ wealth for nearly 90 years. Put our expertise to work for you.