Having an exit strategy is often overlooked in property investment but ignoring this part of the puzzle is not a good idea.
Most investors will look at all the other factors we’ve touched on so far but will have thought very little about how they are going to step away from their investment should they need or want to, for whatever reason.
Firstly, it is a question of psychology. When you are deep in the weeds and embarking on a new project it is difficult to picture the end of it, years down the line
Secondly, with property, many feel an exit strategy is unnecessary. Exiting from a property investment just means selling the place, right?
Before you can formulate your exit strategy, you will want a good idea about what you want from the property, in a best-case scenario.
Considering the future of a property is very important.
Would you like to keep the property as part of a pension plan? Is the plan to sell it after five years and recycle the deposit? Is it something you want to leave to your children when you pass?
Everything needs thinking about and the future is never going to turn out perfectly.
And your ideal scenario might not work out. There might be many reasons why you have to free yourself from a property quickly and you need to know your options for doing so.
Top of the list is knowing who you are going to sell your property to.
If you are taking a house and converting it into an HMO, for instance, then the market you are going to sell to (investors) is going to be very different to the market that you bought from (homeowners).
The last thing you want, when it comes to selling, is the realisation that you don’t have a plan in place for attracting the kind of buyer who would be interested in what you have.
And in a worst-case scenario, you might find yourself in a position where a property is costing you more money than it makes when selling it is going to involve more time and effort than you bargained for.