Today’s REI Classroom Lesson
Joe Lieber explains different exit strategies you can take advantage of with your rental properties.
REI Classroom Summary
Find out the pros and cons of various exit strategies for rental properties, as told from our expert, Joe Lieber.
Listen to this REI Classroom Lesson
Real Estate Investing Classroom Show Transcripts:
Mike: Welcome back to the FlipNerd.com REI classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Joe: Hi, I’m Joe Lieber and I am your host of the REI Classroom today. All right. Today, we’re going to talk about exit strategies for rental properties.
Mike: This show was sponsored by PassiveRental.com.
Joe: What are you going to do when you want to sell? You bought this property, probably somewhere in a state where you don’t live and next thing you know, a few years have passed, and you say, “Hey you know what? I think it’s time for me to cash my chips and get my money out and get on to the next thing.” So let’s talk about some of those exit strategies.
Well, number one, you have the power of the MLS. And it’s a very powerful tool. You can hire a real estate broker, he’ll put your property on the MLS, and away you go. Now here are some pros and cons to that, though. The pros are is it’s very easy. One call to a real estate broker and he’ll go out, take the pictures, list your house. It’s hands-off and he’ll call you when you when he gets an offer. You might not get the most that you want to get for the property by doing that strategy, especially if you’re paying broker fees and closing costs. But, nevertheless, it is an option.
So the con to that, though, is also that you’re a sitting duck. You’re just sitting there with a vacant rental property. It’s not a producing asset, it could be vandalized, it could be burned down, who knows. And what kind of neighborhood it is. An option, though, MLS.
Number two, true owner financing to an end user. There are a lot of people out there who want to buy a home, but can’t procure financing for whatever reason. And there are many reasons why they couldn’t, but you could always attach a healthy interest rate on and do true owner financing to them. And they would have the property in their name, be responsible for property taxes, responsible for the insurance, and of course, responsible for the maintenance. And that’s an option.
But then again, you are giving over full ownership to your property and the cons to that would be what if they do default? Now, you have to do a foreclosure, which could, depending on what kind of state you’re in, it could take anywhere from 30 days to three years, like here in Ohio.
Then there’s another option, option number three. If you bought the house as an investment property, chances are there are other investors that want to buy it as an investment property. And you could seek out local investors to sell it to. [Inaudible 00.02.40] cash I want to do it, or even a guy like me. All the time I buy houses from investors who don’t want them anymore and we work out great deals.
And I always give them cash, but if they don’t want to lose a bunch of money, because if I give them cash they’re going to lose something, but maybe we’ll work a deal out where I can pay you a healthy interest rate. You know, 7, 8 and 9% even. And it’s fair. It’s a short term, it’d be over five years or something, and it’s a much more likelihood for me, as an example of a real estate investor, to pay you, opposed to a tenant paying you. So that’s a wonderful option as well. I’m a big fan of selling to investors. I’m always out there looking for owners who want to sell.
Landlords are always exiting the market for all sorts of reasons. A lot of people are getting older, and they don’t want to just exit the game, the rat race of chasing around rent and rental properties.
And then, another exit strategy, which is the last one for to talk about today, and that’s the rent-to-own option. All of my houses are rent-to-own. Now, although it’s an exit strategy, it’s not a viable exit strategy because most of the homes don’t sell, unfortunately. But it defers a lot of maintenance and a lot of property management because if the person is in there with the intentions of renting to buy the property at some point, they’re much more likely to take care of the property, pay on time, and handle maintenance issues.
So those are the four things for exit strategies for rental properties. I’ll catch you on the next show.
Mike: PassiveRental.com is your source for turnkey done-for-you rental properties. If you’d like to be an investor and not a landlord, please visit PassiveRental.com to learn how to purchase cash flowing, professionally managed rental properties in the hottest rental markets across the country. We can also help connect you with financing for your next property. Invest the easy way today and get started by visiting PassiveRental.com.
Please note, the views and the opinions expressed by the individuals in this program do not necessarily reflect those of FlipNerd.com or any of its partners, advertisers or affiliates. Please consult professionals before making any investment or tax decisions, as real estate investing can be risky.
Are you a member yet of FlipNerd.com, the hottest real estate investing social community online? If not, you can join for free in less than 30 seconds and get access to hundreds of off-market deals, vendors in your market to help you in your business, and you can start networking with thousands of other investors just like you. Get your free account now at FlipNerd.com.
Please check out the FlipNerd family of real estate investing shows, where you can access hundreds of expert interviews, quick tips and lessons from leaders across the real estate investing industry. They’re available at FlipNerd.com/shows or simple search for FlipNerd in the iTunes store.
Joe: Hi, I’m Joe Lieber and I am your host of the REI Classroom today. All right. Today, we’re going to talk about exit strategies for rental properties.
Mike: This show was sponsored by PassiveRental.com.
Joe: What are you going to do when you want to sell? You bought this property, probably somewhere in a state where you don’t live and next thing you know, a few years have passed, and you say, “Hey you know what? I think it’s time for me to cash my chips and get my money out and get on to the next thing.” So let’s talk about some of those exit strategies.
Well, number one, you have the power of the MLS. And it’s a very powerful tool. You can hire a real estate broker, he’ll put your property on the MLS, and away you go. Now here are some pros and cons to that, though. The pros are is it’s very easy. One call to a real estate broker and he’ll go out, take the pictures, list your house. It’s hands-off and he’ll call you when you when he gets an offer. You might not get the most that you want to get for the property by doing that strategy, especially if you’re paying broker fees and closing costs. But, nevertheless, it is an option.
So the con to that, though, is also that you’re a sitting duck. You’re just sitting there with a vacant rental property. It’s not a producing asset, it could be vandalized, it could be burned down, who knows. And what kind of neighborhood it is. An option, though, MLS.
Number two, true owner financing to an end user. There are a lot of people out there who want to buy a home, but can’t procure financing for whatever reason. And there are many reasons why they couldn’t, but you could always attach a healthy interest rate on and do true owner financing to them. And they would have the property in their name, be responsible for property taxes, responsible for the insurance, and of course, responsible for the maintenance. And that’s an option.
But then again, you are giving over full ownership to your property and the cons to that would be what if they do default? Now, you have to do a foreclosure, which could, depending on what kind of state you’re in, it could take anywhere from 30 days to three years, like here in Ohio.
Then there’s another option, option number three. If you bought the house as an investment property, chances are there are other investors that want to buy it as an investment property. And you could seek out local investors to sell it to. [Inaudible 00.02.40] cash I want to do it, or even a guy like me. All the time I buy houses from investors who don’t want them anymore and we work out great deals.
And I always give them cash, but if they don’t want to lose a bunch of money, because if I give them cash they’re going to lose something, but maybe we’ll work a deal out where I can pay you a healthy interest rate. You know, 7, 8 and 9% even. And it’s fair. It’s a short term, it’d be over five years or something, and it’s a much more likelihood for me, as an example of a real estate investor, to pay you, opposed to a tenant paying you. So that’s a wonderful option as well. I’m a big fan of selling to investors. I’m always out there looking for owners who want to sell.
Landlords are always exiting the market for all sorts of reasons. A lot of people are getting older, and they don’t want to just exit the game, the rat race of chasing around rent and rental properties.
And then, another exit strategy, which is the last one for to talk about today, and that’s the rent-to-own option. All of my houses are rent-to-own. Now, although it’s an exit strategy, it’s not a viable exit strategy because most of the homes don’t sell, unfortunately. But it defers a lot of maintenance and a lot of property management because if the person is in there with the intentions of renting to buy the property at some point, they’re much more likely to take care of the property, pay on time, and handle maintenance issues.
So those are the four things for exit strategies for rental properties. I’ll catch you on the next show.
Mike: PassiveRental.com is your source for turnkey done-for-you rental properties. If you’d like to be an investor and not a landlord, please visit PassiveRental.com to learn how to purchase cash flowing, professionally managed rental properties in the hottest rental markets across the country. We can also help connect you with financing for your next property. Invest the easy way today and get started by visiting PassiveRental.com.
Please note, the views and the opinions expressed by the individuals in this program do not necessarily reflect those of FlipNerd.com or any of its partners, advertisers or affiliates. Please consult professionals before making any investment or tax decisions, as real estate investing can be risky.
Are you a member yet of FlipNerd.com, the hottest real estate investing social community online? If not, you can join for free in less than 30 seconds and get access to hundreds of off-market deals, vendors in your market to help you in your business, and you can start networking with thousands of other investors just like you. Get your free account now at FlipNerd.com.
Please check out the FlipNerd family of real estate investing shows, where you can access hundreds of expert interviews, quick tips and lessons from leaders across the real estate investing industry. They’re available at FlipNerd.com/shows or simple search for FlipNerd in the iTunes store.
