You’ll Need Plan B If: 1. You spent too much 2. You mis-judged the neigborhood. 3. The Economy Changes 4. The Market Changes 5. Your Life Changes 6. Your Philosophy Changes 7. Your Options Change G r e e n E a r t h E q u i t i e s . C o m
© 2010
Saving The Planet One House At A Time
Review Of 8 Exit Strategies At GreenEarthEquities.com Type 90728 in the search box For the 8 Exit Strategies. *** Know how you will get out... Before you get in. This should include at least: Plan A, Plan B, & Knowing when to change plans. Summary on the next page G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time
1. Buy & Wholesale Flip 2. Buy, Renovate & Retail To Homeowner 3. Buy, Renovate, Retail Flip With Discount Equity 4. Buy, Rehab, Seller Finance & Mortgage Note 5. Buy, Rehab, Rent, Cash Flow & Investor Flip 6. Buy, Rehab, Rent, Package & Sell to Investor 7. Buy, Rehab, Sell with Lease Option. 8. Buy, Rehab, Re-Finance Equity & Rent
Not enough room for Energy Package My Favorite in last year’s Seller’s Market
Not enough room for Energy Package Takes more money than most of us have
This can move a hard to sell house. 5 home minimum Opens up a bigger pool of buyers who aren’t as demanding of concessions (may need to combine with #8 to get your cash back) A good choice if Plan A (#2) doesn’t work. You get your money back and keep going
G r e e n E a r t h E q u i t i e s . C o m
© 2010
Saving The Planet One House At A Time
Blessed Are The Flexible For they shall not get stuck with bad plans that aren’t working. Know when to hold ‘em When to fold ‘em (& change strategies) One Plan might be to 1. do the renovation. 2. Market it for sale for a month, If it doesn’t sell, 3. Change strategies, Refinance and rent ..... ? G r e e n E a r t h E q u i t i e s . C o m
© 2010
Saving The Planet One House At A Time
Flip vs Buy & Hold Benefits of Energy Wise Flipping (For those who care about Green and the Environment and Carbon Footprints) (Most Investors dont) Eliminate more blight More Green Jobs Improve Neighborhoods Increase Tax Base More Carbon Reduction Less Reliance on Foreign Oil. G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time
Spent Too Much Or Mis-Judged The Neighborhood These two usually go together. One causes the other. If you find potential buyers saying, “Great house, but not quite the neighborhood we’re looking for”... It may be time to switch plans from #2 to #8. It will require refinancing for you to stay in the game G r e e n E a r t h E q u i t i e s . C o m
© 2010
Saving The Planet One House At A Time
Economy, Market Changes These two may be connected but maybe not. The Economy was pessimistic 2 years ago, causing most investors to “sit out” That made for a great buyers market. Now Optimism has brought hordes of investors back in, reducing the inventory, making good deals harder to find and more difficulty to sell at a high price G r e e n E a r t h E q u i t i e s . C o m
© 2010
Saving The Planet One House At A Time
Buyers Market - Sellers Market When more buyers come into the market, like now, the inventory shrinks and good deals are harder to find. These homes then flood the market making good prices harder to obtain at time of sale. This may indicate a time to change exit strategies. (from 2 to 8, for example) G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time
Life & Philosophy Change I’m moving to Virginia (Following the Grandbabies) GreenEarthEquities will continue in California with the team we have created. This removes one of my reasons to prefer only flipping (Disliking Landlord Issues) Because those responsibilities will now fall to my associate, I can now consider #8 BRRR G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time
Options Change I am not suited for landlord responsibilities, preferring to design new systems, spend time with grandbabies and protect my wife from pirates on cruises. Since Rob will now be assisting me in taking care of those issues, the #8 BRRR exit strategy becomes a viable option.
G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time
Changing Directions: Original Plan: Retail Flip Strategy # 2 Changes: 1. We mis-judged the neighborhood. 75% of potential buyers discounted us for “neighborhood” This home appraised $7000 under asking price (our first one) 2. It’s become more of a buyer’s market
G r e e n E a r t h E q u i t i e s . C o m
© 2010
Saving The Planet One House At A Time
Challenges Of Changing: The home was purchased with Line of Credit Money. This needs to be kept turning over, so it’s good for flipping but not for holding and renting Solution: #8 BRRR (Refinance) Refinance Details 5.25% 30 years 70 - 75% finance This gets all or most of our cash back to do the next project. G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time
Maximum Flexibility With the Refinance in place we are not locked in to any option. We can: 1. Rent It. 2. Lease-Option It 3. Sell It The low appraisal makes it less likely we’ll sell it now Especially since it is renting for a healthy cash flow. G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time
CraigsList To Rent, Lease Or Sell CraigsList has sections for Rentals and Sales. Both Work Well. You must keep your ads separate You’ll need membership in a credit bureau or way to check credit and rent history. G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time
Other Options: 1. We could have LOWERED THE PRICE and sold for cash. Not totally out of the question but definitely not a first option. We have found that people with “A” credit seem to demand more price concessions. This is also more common when the property is listed on MLS.
Oh, No!
G r e e n E a r t h E q u i t i e s . C o m
© 2010
Saving The Planet One House At A Time
Benefits of BRRR #8 1. Cash Flow Positive (wife happy) 2. If the R.E. Market goes up, I will benefit from the increase. 3. No Tax Consequences until the property is sold. 4. Low appraisal issue is pushed into the future when it will probably become irrelevant. 5. Money available to Re-invest 6. Freedom to pursue Zero Energy with 3KW PV system G r e e n E a r t h E q u i t i e s . C o m
Š 2010
Saving The Planet One House At A Time