You’ve heard stories of properties that investors lost money on, but luckily this isn’t the norm for most investors. Occasionally, a property might have unexpected repairs that you hadn’t budgeted, but by buying deep enough, you protect yourself a bit from actually losing money on a deal.
So, what do you do if you don’t think you’re going to come out as ahead as you originally planned?
One of the first things to consider is if another exit strategy might allow you out of the property with more money than your current plan. If you planned on wholetailing the property, would it benefit you to do a full rehab?
Be careful that you don’t price yourself out of the neighborhood and also take a look to see what your competition is. If updated homes nearby aren’t getting the bang for their buck, this might be even riskier. You have to look at what you can sell it at today vs. after a full rehab, including accounting for your time and holding costs.
Sometimes this makes sense, but not always.
This can be flipped the other way. You might have originally planned to do a full rehab but with a changing market, it might be safer to wholesale it and move onto the next property.
Other times, turning it into a rental will make you more money long-term, if you’re in the position to do this.
Don’t get stuck doing just one exit strategy.
If you do this, you’re leaving money on the table.
Get creative. There are a lot of creative financing options around that can pay you more long-term than you’d be taking as a simple wholesale deal.
Creative financing needs to be done correctly. Learn everything you can about these strategies, if you’re interested and know your state and local laws.
Most investors rarely take an actual loss on an investment deal. Knowledge is power. Know what opportunities you have to make lemons out of lemonade and move onto the next deal.
