Exit Strategy - Please Explain

[Cash Flows]

I am wondering if anyone can explain this to me a little further.

Exactly what do others consider as an exit strategy with their IP's?

I know I can sell and use redraw in case of emergency but not sure what others consider to be an exit strategy.

Cheers

Cash Flows

 

[D.T.]

Quite a few options depending on what you want, how soon you want it, what your risk profile is and how many assets you have.

Consider these examples;
Selling a couple of properties to pay down debt on reaminder and thus making rents exceed expenses
Having rent exceed expenses, without selling (via value adding or simply allowing father time)
Migrating assets (either over time or by selling) to higher yielding assets such as cip and / or shares
Withdrawing built up equity and using it to fund full or partial lifestyle
Moving to a place where your lifestyle cost may be halved

So, what is it youre trying to achieve?

 

[Cash Flows]

Thanks for the reply DT.

Basically, I want to build up a portfolio that offers me $52k per year in todays dollars. Well actually more like $40k as I plan to have some shares/annuities as well.

So far have 2 IP's but looking to add another 3-4 over time.

So what exit strategies would you recommend I look into?

 

[Terry_w]

What do you want to exit from?

If the loan, then you could:

1. Gradually pay them off

2. Sell one and use the proceeds to pay down the others.

3 Sell one or more and invest in higher yielding investments such as shares with franked dividends


You could also keep the loans in place but borrow to live or borrow to pay investments and live in rents.

Die, leaving the property to someone else who will then pay out the loan or keep the loan and repay it themselves.

 

[Corey Batt]

Thanks for the reply DT.

Basically, I want to build up a portfolio that offers me $52k per year in todays dollars. Well actually more like $40k as I plan to have some shares/annuities as well.

So far have 2 IP's but looking to add another 3-4 over time.

So what exit strategies would you recommend I look into?

If you're looking at retiring on rental cash flow why would you be trying to work out an exit plan?

 

[WattleIdo]

Probably just in case some know it all asks 'but what's your exit strategy?' in a superior tone.

 

[imbi3]

If you're looking at retiring on rental cash flow why would you be trying to work out an exit plan?

Cash Flow said a portfolio, could be shares, or other assets? Exit plan could also mean having no debt and enjoy the rental income

 

[Scott No Mates]

When purchasing, you need to consider that if things get tight, how long will it take to exit from the investment? (as well as other options like 2nd mortgage etc).

If you have bought a property in the bush, say a small country town - how long is it going to take to sell (without being a fire sale) is it 3 months, 6 months, a year or longer? If it is a city property does it lend itself to an auction sale (how did you buy it - post auction, private treaty, off market?).

 

[ChrisA1]

I take the approach that an investment is for a season, not a lifetime (unless I own it unencumbered and it's contributing to my days on the beach!), so as I buy a property, I consider why I bought it (CF or CG) and what trigger will strike a sale.

For example, one of mine was bought CF +ve with reno potential so when the reno brings enough of a profit, I will reno and sell so I can put my money into a different market and start again....

 

[ok180]

Mine is basically to keep buying/adding value till i'm 40, probably semi retire around 45-50 and do something easy on the side then start selling them one by one when I'm around 60. By that time the properties will be too old to be worth keeping and I probably wouldn't want all the headaches by then.