Real estate is a market-driven industry, and when conditions change—whether due to interest rates, buyer demand, or unexpected challenges—our primary strategy may no longer be viable. Without a solid backup plan, you could end up stuck with a property you don’t want—or worse, be forced to sell it at a loss.

A key driver of these strategies is the renovation budget. As I walk through a property, I’m already mentally calculating repair costs, potential profit margins, and viable exit options. Once I gather those preliminary numbers, I input them into our deal analysis spreadsheet to determine projected returns. This helps me determine whether a deal meets our financial thresholds and which exit strategies make the most sense.

Here’s a breakdown of the exit strategies I consider as I walk properties for potential acquisitions.

Primary Exit Strategies

1. Buy and Hold (BRRRR Method)
Can this be a solid rental to add to our portfolio using the BRRRR strategy (Buy, Rehab, Rent, Refinance, Repeat)?

• Renovation costs must be minimal to make the property rent-ready.

• The property must meet lender requirements upon stabilization.

• It should provide positive cash flow at current commercial interest rates.

• The post-renovation appraisal should support a refinance that allows us to recoup 100% of our initial investment at a 75% loan-to-value (LTV).

• It must also meet the lender’s minimum Debt Service Coverage Ratio (DSCR) guidelines.

2. Retail Flip (Sell to Owner-Occupant)
Selling to a retail buyer typically requires a higher level of renovation—30% to 50% more costs than a rental rehab.

• We factor in resale costs like agent commissions, seller concessions, and closing costs.

• If the expected profit from a flip is similar to what we’d earn in two to four years from rental cash flow, we often choose to keep the property in our rental portfolio.

• The property must still meet our buy-and-hold criteria with a 20% contingency cost added if renovations go over budget.

3. Turnkey Flip
We buy the property, complete renovations, and rent it. It’s now a stabilized performing asset. We then resell it as a cash-flowing rental to another investor. If we can achieve 75% to 80% of our projected retail flip profit, this is a potential exit for us.

• Passive income opportunity without doing the heavy lifting of buying and renovating the property.
• This strategy appeals to out-of-state or newer investors who want immediate cash flow on the day of purchase.
• The property must be fully stabilized with a lease in place, meet lender appraisal and DSCR requirements, and ideally include professional property management. Our profit margin comes from delivering a finished, income-producing asset at a premium.

4. Wholesale
If we choose to wholesale the deal, the projected assignment fee must be at least 50% of what we would have earned flipping it retail.

5. Wholetail
We close on the property, minor clean up and trash out, and then resell it “as is” either off-market through our network of investors or list it on the MLS.

• The profit must still match the wholesale spread, even after accounting for holding and closing costs.

6. Creative Financing
If the seller is motivated, we may pursue a creative deal structure:

• Subject-to existing mortgage, if payments are current and terms are favorable.

• Seller financing, if the property is owned free and clear or has significant equity.

• These strategies allow the seller to offload a problem while creating cash flow for them—and a low upfront acquisition for us. It’s a win-win all around.

7. Brokerage Listing
If the numbers don’t work for any of our exit strategies, we consider whether the property could be listed through our brokerage.

• Even if it’s not a fit for us, it might work for another buyer in our network—and still generate revenue through an earned agent commission.

Having multiple exit strategies is not just good practice—it’s essential for our long-term success. Every market shift, renovation set back, or unexpected cost can quickly change the trajectory of a deal. That’s why we never enter a deal hoping everything goes perfectly. We enter prepared.

The true power of this approach is that it gives us flexibility. When you have a clear grasp of your numbers, understand your financing options, and are honest about your capabilities, you can pivot confidently if your original plan falls through. 

Whether you’re an experienced investor or just starting out, always ask yourself: “If Plan A fails, what’s Plan B—and C?” That mindset will protect your capital, reduce risk, and create more opportunities to grow your portfolio profitably and sustainably.

Hope this gives you the clarity you need as you evaluate your next property deal—and the confidence to move forward with purpose.