As we all know, in a short sale, we are able to determine our profit right up front when we buy the property, but we get paid when we sell the property. This brief covers the various exit strategies that enable us to get paid.

A number of years ago when I was active in the stock market, I came across a book by Ted Mamis, called, ?When to Sell?. The premise was that there were myriad books that told you the mechanics of how to buy stock, but never had a clue when you should sell those same stocks. Same thing appears to apply to Real Estate. I have on my shelf right now over a dozen books that, more or less, go into great detail on how to acquire property, but virtually all of them are silent on how to unload it.

Before you go into Real Estate investing, before you do your first deal, you must have an exit strategy firmly in hand.

It goes without saying that if you get stuck with a Money Pit, you could be in for a very strange ride! You have got to have a plan to keep you from being brutalized.

There are three exit strategies that you should be familiar with before you do your first deal. These are: (a) Wholesaling, (b) Holding as Rentals, and (c) Reselling Outright.

Wholesaling is what one does when one buys a property that needs extensive repairs, and then reselling that property to someone who wants to do those repairs. Typically this approach has the lowest return, but has the fastest turnaround. You can typically get $10K to $20K for a flip to an investor who wants to rehab the house. It's not a killing, but it is fast money. However, to get an investor excited, the house price must be 55-65% of the After Repaired Value (ARV) of the property. You must negotiate as hard for this kind of price reduction as you would if you were going to sell the home any other way.

Holding as a rental is another obvious strategy. Here, if the house is not too badly worn, a little sprucing up could be what you need to turn a profit. The caveats here are twofold: (1) Can you actually see yourself as a landlord, and (2) can you get a positive cash flow? If you don't want to be a landlord, or if there is not a positive cash flow, then this exit strategy is not for you. Foe example, if you feel that you can feel comfortable with a positive cash flow of, say $200 - $400 a month, and you want to take advantage of long term future appreciation, then by all means, rent it. I?d suggest that you seriously consider buying one of those homeowner's warrantees that would cover plumbing, roofing, air conditioning, heating, etc, if they are available in your area.

Reselling outright is what the majority of you will do. Depending on the condition of the property, you must watch how much you sink into the house, and weigh that against the current market trend in that area (are property values going up or are they going down), what kind of discount did you negotiate, and who long have homes been staying on the market, in general? For these kind of deals, the general rule of thumb is that you try to negotiate a price of at least 75% - 80% of the ARV. Otherwise, you may not be able to get a reasonable amount of return when you sell it. You will have to recoup all of the holding expenses that you incur while you're waiting for the home to sell. This includes taxes, insurances, loan payments, utilities, real estate agent commissions, closing costs, and hidden costs such as those pesky repair items you uncover while you have the home on the market. If you opt to have the home 'staged?, that will be an additional expense.

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