4 exit strategies in the art of the deal blog by RJ Palano for Personal Real Estate Investor MagazineHow long would it take you to recognize a good purchase opportunity?

How long would it take for you to make a decision to take action?

In the business of flipping houses, you must size up a transaction quickly and get the property under contract before someone else does.

This new series of blogs I am writing will focus on real deals that I’m doing currently in the Atlanta Metropolitan area.

The real estate market is local in nature, and in my position, we take what the market gives us. Over the last six years we’ve operated only in the Atlanta area. Initially, we acquired homes in REO packages and then individually from banks and foreclosure auctions. Those opportunities are 10 percent of what they were six years ago.

The supply of houses has been drastically reduced, thus most of the hedge funds have packed their bags and left. That leaves me and all the other hopeful investors scrambling for the crumbs of houses in a real estate market that has heated up.

These cycles of supply and demand have caused me to change my approach to the market.

My highest and greatest skill is negotiating profitable opportunities from homeowners. Thus, we’ve modified our marketing to attract home sellers, and we are back to doing what we do best.

In the examples I will be sharing in this upcoming series of articles,  I will show how I’ve targeted my marketing to attract sellers so I can buy their houses directly from them. These are houses that are not listed on the Multiple Listing Service (MLS), and the only competition I have is usually other house buyers like myself. Thus, I must recognize an opportunity quickly, and I must decide my exit plan.

Know your exit strategy in the deal

Never go into a negotiation to buy a house unless you know exactly what your strategy is.

I immediately determine my exit plan from the following options, based on the property’s location, age and quality, as well as the quality of the neighborhood:

1. Wholesale the house to another investor in “as is” condition

When I use this strategy, I either assign my interest in my sales contract with the owner or I close on the transaction and then I market to other investors.

2. Buy – rehab – retail

In this strategy, we close on the home from the seller, remodel it and place it on the market. There have been times when I leave the title in the name of the seller so that he/she is selling directly to my buyer.

This could be important to avoid seasoning requirements with my sale to an “end user” (homeowner). I can protect myself with a recorded option to purchase from the seller, or I can record a security deed to protect my option.

3. Buy – rehab – sell to investor and we manage the property

If the property is a quality house in a quality neighborhood, we might sell to one of our current investors at a profit and place it into management.

4. Buy and hold

Simply put, we keep some houses in our own portfolio of rentals.

The key to buying directly from owners is to only buy from motivated sellers. If they’re not motivated, you are wasting your time. Depending on the circumstances, you can offer to get the owner to hold a note at no interest. I’ve done this dozens of times and have done so again recently on a fantastic opportunity that we will sell retail.

Feel free to send me email or call me (813-495-3006) to ask questions about specific transactions. My desire is that you will be able to put together profitable transactions similar to mine.

Keep an eye out for upcoming articles with pictures and videos, as I will be sharing real-deal structuring and negotiations with you.

Categories | Article | Topics
Tags |
  • R J Palano

    RJ Palano is the acquisition director of BuyCashFlowProperties.com, a Tampa, Florida-based company that primarily provides turnkey houses for investors in the metropolitan Atlanta and Tampa Bay areas. His property management experience spans more than 35 years, and he has been involved in more than 3,000 real estate transactions in 12 states and more than 50 cities. Contact him at 813-495-3006 or rjp@buycashflowproperties.com.

Related Posts


Submit a Comment