What's The Secret In Achieving Exit Strategies When Investing In Property?
Last updated 01/02/2019
From individual homeowners to on-going property investors, a crucial factor in making the best advantage of the property you invest in is having a workable exit strategy in place. If you are already scratching your head in puzzlement and wondering what on earth an “exit strategy” actually is, don’t worry because it is merely investor jargon for deciding on the optimum time to “cash in” your investment.
Making calculated and realistic predictions
OK, so there is no crystal ball or magic formula available to accurately predict when to “exit” an investment but there are a few things that can be counted on (to some extent anyway) and they should at least be considered. The first of these is that historically property prices have always risen and also provided better returns than most other forms of investment. That includes excellent rental potential and profit through value increases. The other point to consider is that in the UK there is a drastic shortage of housing pushing up prices and rents that looks set to prevail at least until 2030!
Setting viable investment goals
While it may sound obvious, returns usually fall into either the short or long-term and it is important to factor in your goals and financial circumstances because these will have a direct impact on your expectations. Everything from tax implications to when you expect to retire and how you expect your estate to be dealt with after you shake off this mortal coil ought to have a bearing too. Whatever your investment expectations may be, planning your exit strategy is going to be a vital component in your overall success.
Making it all work in your favour
The real secret to achieving your exit strategy goals may lie in allowing for a certain amount of flexibility while keeping the number of expected “givens” to the minimum. As is so often advised, it is prudent to work on realistic minimums and take advantage of the situation if your investment performs better than anticipated. Most astute property investors will also have their next opportunity already in mind as any current one’s approach their points of exit. Forward planning is therefore crucial and you would be prudent to continually monitor and adjust in line with any unpredicted changes in the state of the market.
Setting off on the right foot
It virtually goes without mention, of course, that all of the above should be priority points before an individual investor actually takes the all-important decision to invest. Working backwards and choosing projects that suit your exit strategy goals makes a great deal of investor sense. You need to bear in mind, however, that you may risk shooting yourself in the foot by discounting an opportunity such as buy to let for example because it doesn’t appear to fit your existing exit strategy profile.
Summing up your options concerning exit strategies in a few words, flexibility in all of the above is likely to be a key factor to your property investment success.
If you'd like to know how to plan your exit strategy, make sure to read this blog post.
Please note, this blog post is not to be considered as investment advice. We recommend you seek independent financial advice and conduct your own due diligence before making any investment.