If you’ve been watching this season of Flip or Flop, then you know that Tarek’s back has been really killing him lately. Health problems and other unforeseen issues can pop up at the worst possible times, but as a house flipping team, we work together, trading off responsibilities and tasks, to make it all work out in the end. All of the things we’ve dealt with on our flips have had me thinking about our exit strategies when we go into a real estate business deal. But what if things go wrong and you can’t sell a property? Check out these exit strategies and think about how you can use them to make your flipping business bulletproof.
Find Out What the Buyer Wants
So, let’s say that you’ve bought and rehabbed a property. The place looks great, and you feel like you should be able to flip it fast, but you aren’t getting any offers or you have interested buyers but they’re hesitant about making an offer. First, find out what they want from you that could get them to make an offer.
We had one house with a first-floor master bathroom that didn’t even have a door. It was a weird and unattractive “feature” on an otherwise amazing house, and it really hurt us. At the open house, though, we talked to a few interested buyers about installing a sliding door before closing to get them to buy.
Lower Your Price
Sometimes, though, there’s nothing else you can do to a house. You’ve already updated and improved everything you can, but you just aren’t getting any offers. If you let the property sit on the market, it’s going to cool really quickly. So, if you have a house that’s just sitting there with no offers, I definitely recommend being proactive and bringing the price down a little bit.
If you lower your price, (sometimes even just by a little) you can get a lot more interest in the property. This is a much better option than just having the property sit on the market and someone giving you a low ball offer because it’s been on the market a long time. Remember, flipping is all about moving quickly to get a fast, positive return on your investment. The sooner you sell, the better, even if it’s for a little bit less than you wanted.
Work Out a Rent-to-Own Deal
If you have buyers who are interested but are really not sure yet, talk to them about a lease option that will let them rent the property while putting money towards purchasing it. This strategy is called a lease option, and you can often get the price you originally asked for by going this route. You are going to have to either be a landlord yourself or hire a property management company, though, so keep those things in mind if you go this route.
Change Your Exit Strategy
Investing in real estate is all about having multiple exit strategies. Sure Tarek and I love flipping houses the most, but sometimes when a house won’t sell quickly it can be time to switch to plan B. Would this house make a good rental? How about an executive rental property? Or if you don’t want to hold the property, then now it’s time to think outside the box and change up your marketing. Does it have a nice home office space that could be conducive to someone working from home – in which case consider doing a direct mail campaign to all the members at your local chamber of commerce. Or if it’s a particularly family friendly home, contact the local schools in your area and ask if you can pay to put an add in their email blast or run an ad in their newsletter.
Remember just because a house isn’t selling doesn’t necessarily mean that no one wants it. It usually just means you haven’t reached the right group of buyers yet!
Tarek and I have had a number of our deals “go south” but with a little creative thinking you can turn what looks to be a big headache, into an even bigger financial success!