Planning an Exit Strategy in CRE: Early Warning Signs you Should Look For
Planning your Exit Strategy in CRE is the first step you make before investing. Once you started earning on your investment, holding on to it for as long as you can is the most common strategy you might think of. That is why some find it a bit difficult to start investing. It requires a lot of planning, predicting, and guts before you give away your money maker. Hence, it’s better to plan ahead your exit strategy and look out for early warning signs on whether it’s time to let go of your properties.
Buy-and-rent strategies work but they often prevent you from increasing your bottom line. Why? Because you’d missed out on the opportunity to sell it at its highest selling point. It is still best to observe the price action closely and look for clues that might predict a trend that gives you a hint on when to exit on your investments.
Signs to Lookout when Planning an Exit Strategy in CRE
Look into your Property Financial Projection
If you have already planned your exit strategies, you should be able to obtain an output of your pro forma. This projection would help you decide on how you would proceed with your exit strategies. Look into your property’s income, operating expenses, net operating income (NOI), and cash flow.
Although these metrics are used as a reference point when purchasing a property, you can also use them to determine if the property is performing well. If an opportunity to sell the property is present, you can check the pro forma if it provides you with a much better price than the original projection.
Check the Market
Reviewing market trends provides you with an opportunity to have an asset that exceeds its original value. If you see signs of movement in the commercial real estate market, it’s best for you to evaluate your assets. This will help you determine if selling your commercial property now is a good move so as not to miss an opportunity to sell it higher in the future.
Seeing signs on how viable your properties are in the market would help you identify if a new supply of apartments would hurt your cash flow and that if it would generate more income to sell the property. These factors can help you decide if it makes more sense to hold on to the asset and continue renting or leasing them.
Available Buyers
The moment you put up your commercial asset for sale, available buyers would pop up from different directions. And this increases your odds of selling your property fast and at a higher rate. Hence, it’s crucial to know who your buyers are and what motivates them to close the deal gives you the upper hand.
Let us guide you in monitoring the warning signs
Learning what warning signs should you look at when planning your exit strategy is essential in maximizing your investments. Most importantly, work with a trusted partner who can help you make these decisions in selling your commercial real estate assets. Start a conversation and be guided with your CRE exit strategies.
