Know Your Exit Strategy BEFORE You Build a Rental Property

exit strategies market research multifamily financing rental properties rental trends Nov 10, 2021

The kind of property that you build might choose your exit strategy for you. I would favor constructing properties that give you multiple off-ramps, right? 

Lots of different ways that you could potentially exist in the future. For example, I closed on a 32-unit townhouse project in Phoenix. We're going to Platte this as 32 townhouses, right? Not as one entire, um, one entire subdivision, so, or sorry, one entire project. So that way in two years is the price of a single townhome. 

Really astronomical. Do we want to just pick the, pick these off one by one and gradually sell? Right. We want to have that option available to us. I took my family on vacation. It was at last fall to the Florida panhandle destined, which is awesome. But I saw so many vacation properties down there and we would walk from the place we were staying at to the beach. 

And I saw probably five or six, big new vacation properties, single-family homes. But they looked kind of like a glorified apartment complex, right? There are five family cars parked out there. It's a family reunion. And that builder built that thing as a value-engineered box. Right. It was built as a vacation property to maximize bedrooms and maximize income per night for all these families that year around go to Destin and want to live close to the beach. 

And that's great for him. Right. He's going to maximize that, that charging it. But what, what about when he goes to exit? Right? Is the vacation market good? Is it bad? Can you really sell it to somebody that's just going to live there? What is that?  

That exit is kind of fuzzy depending on what the vacation economy looks like.

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