Property Analysis Process - Selecting an Exit Option

Property Analysis Process - Selecting an Exit Option

Property Analysis Process - Selecting an Exit Option

 

What is going to happen?
Continues with a third part of my Flip series.
Today we will address an important step in the property analysis process, Selecting a port option.
Build a Core Exit Plan after an initial understanding of the property numbers.
A quality entrepreneur is an entrepreneur who knows how to adjust the right exit option for any project that is on his desk and not afraid to change the exit option if necessary. With time and experience, each entrepreneur or investor will add more and more exit options to his arsenal.
In the transaction, each exit option is directly dependent on a number of factors that I will consider in analyzing the options, such as: region, type of investor, current project status, etc.
1. Complete renovation and A to T, system replacement, high level of cosmetic finish and layout changes.
When to put up as an option?
• Areas with average assets higher than the municipal average
• Medium socioeconomic status +
• Comparative market analysis that indicates the ability and willingness of buyers to pay more for a special product
• High renovation capabilities
• High marketing capabilities for assets for sale
Who is it for?
• High renovation skills and knowledge in dealing with the bureaucracy of this type of renovation
• Local representation (Due to the nature of the renovation and sale it is recommended to have a local representative who oversees the process. Mistakes can cost a lot of money!)
• Investors who are in no hurry to get the money back, but want to maximize it
• Higher-risk investors (most often we will talk about decomposed assets, which can give rise to additional problems that we did not include in the budget)
Important highlights according to the character involved:
Buyer: You sell high-priced property, it's important that buyers love what they see (kitchen, layouts, finish level and interior design)
Inspector: You sell high, it is important for the house to be in order from A to Z and pass inspector easily, in addition to working with permits in case of proof of demand is recommended.
Appraiser: Less important, even with lower valuation the buyer will complete the equity in case he likes the house.
2. Renovation of what is needed, system repairs and medium cosmetic finish.
When to put up as an option?
• Area with average asset value per area
• Medium and lower socioeconomic status
• Comparative Market Analysis Indicating Medium to Fast Buyers Market, Renovated or Saved Properties +, Sold Fast at Market Prices
• Standard remodeling capabilities
• Standard asset marketing capabilities for sale
Who is it for?
• This is the classic flip, 4-6 months from buy to sale
• The standard investor, limited budget, does not want to take high risks.
Important highlights by the illustrated figure:
• Buyer - It is important to invest in the right (and only right) places. Also, do not budget too high a finish, the buyer wants to look "round" and does not differentiate between medium and high materials. In addition, I recommend not to rush to replace, try and repair and renew in order to maintain a low budget and high profit
• Inspector - Sales at a market price, even if small bills are raised with insufficiency or comments on new systems (but still working), the deal is likely to close
• Appraiser - a report must be close to the desired price. A population that is usually unable to pay a lot of cash out of pocket on the mortgage (in addition if you did not plan to do so in advance)
3. Only spot renovation and cleanliness without replacing systems or overly high financial investment
When to put up as an option?
• An area with an asset value lower than the average in the area
• Strong rental areas suitable for investors
• Low and medium socioeconomic status
• Market analysis that indicates a significant majority of investor buying or, alternatively, the purchase of discounted retained assets with refurbished assets that find it difficult to move fast due to the high price.
Who is it for?
• The standard investor, limited budget, does not want to take high risks.
• Investors with limited remodeling capabilities or alternatively if all teams are engaged in other projects
• Investors who want to work fast, projects on average 2-4 months.
Important highlights according to the character involved:
• Buyer - Your buyer is an investor, it is important that the house is clean and not scare the average investor (new investors are usually easily frightened by an unpleasant asset)
• Inspector - irrelevant as long as very unusual things come up
• Appraiser - Some investors will come with financing, so it's important that the numbers make sense to the buyer investor. Already recommend looking for properties sold in the area that you can rely on as an ARV for a potential buyer’s appraiser.
4. Put on a contract and transfer to another investor without a purchase (Holsale)
When to put up as an option?
• The property does not meet your requirements for execution, but can be a deal to another investor
• Limited remodeling capabilities
• Limited / nonexistent budget
Who is it for?
• Under-market asset tracking capabilities directly with the seller (without intermediaries or mid-range holsellers)
• Local representation (working with these vendors often requires frontal meetings and lots of polo-ups)
• Investors with local buyer lists
• Investors who want to build a holsale array
• Limited budget
• Investors who want money now and don't want to wait for purchase, execution and sale
Important highlights according to the character involved:
• Buyer - This is where it starts and ends, it's important to build a pre-buyer list. Also, prepare marketing tools for advertising the property and finding the happy buyer
• Inspector - irrelevant
• Appraiser - Some investors will come with financing, so it's important that the numbers make sense to the buyer investor. Already recommend looking for properties sold in the area that you can rely on as an ARV for a potential buyer’s appraiser.
In conclusionChoosing the exit option is one of our most important choices as investors.
Never work on the machine, the fact that you have done something in the past does not mean that it is suitable now. Get creative! Think outside the box! And you will find the right exit option for your new project.

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