prioritizing exit strategies on rehabs

[Ashley C.]

I'm a newbie investor planning to rehab with private lender funds. How do I prioritize my list of potential exit strategies so I protect profit while cashing out my lender as agreed? I plan to buy and rehab so well it can't help but sell, but best laid plans and all....

Choices so far are:
sell full price (or close to) retail
discount and sell as investment property, vacant
discount and sell as investment property, tenant in place
lease option

I appreciate your help.

[Will Barnard]

As a rehab flipper, buy and hold is never an exit strategy as you have not exited and placing a tenant to sell to a buy and holder may only work in certain parts of the country as your rehab was initailly intended to go to an end user and thus, rehabbed accordingly. For tennats, you would likely use less expensive things and not "deck it out".

The most important things to do are as follows:
1. Know your market and the conditions of that market (knwoinmg waht has happened over the past 6-12 months will better help you make an educated estimate on what will happen over the following 2-6 months (your holding time).
2. Buy right. In the case where flippers take a loss, it is almost always because they overpaid for the property. If you buy with a margin large enough so that everything could go wrong, and you could still drop the price to "fire-sale" it and walk away clean after paying back your lender, then you will almost always be safe.
3. Know your rehab budget and stick to it. Several have underestimated rehab budgets and this mistake eats away at the profit margin and reduces your margin for error in other areas.