Exit Strategy

What it is

Exit strategy is the answer to “what am I doing with this house when the work is done?” There are three honest answers: sell it (flip), hold it (rental), or refinance and hold it (BRRRR). Every deal needs a primary exit and at least one backup before you sign the contract.

The exits are not interchangeable. A flip needs comps, a short timeline, and finishes that match buyer expectations. A rental needs cash flow at realistic rent, a dscr loan or conventional refi that actually pencils, and finishes that survive tenants. A BRRRR needs enough forced appreciation to refinance out most or all of your cash. Same house can be any of those three. The acquisition price, loan structure, and scope change depending on which one you’re targeting.

Why it matters

Deals die on the exit, not on the entry. I’ve watched new flippers buy houses they cannot flip, cannot rent, and cannot refinance, then spend two years figuring out which mistake they made. The mistake was not having a defined exit before the contract dried.

Flipping produces cash. Rentals produce wealth. If you flip and never hold, you bought yourself a job. Every flip could become a rental. Every rental is a flip with a different exit. That’s the four controls of real estate: the deal, the strategy, the work, and the market. Strategy means knowing what you’re doing with the house before you buy it, not after.

The houses I love most are the ones where the flip sells clean and the rental math would also survive a down market. Both doors open. That’s the deal you chase. Rule 3 of the solo house flipper methodology: never buy a house that doesn’t work as a rental. It doesn’t have to be optimized for a rental — it just has to work if you have to sit on it.

How it shows up

On every deal I run the math three ways before signing. Flip exit: ARV times 70% minus rehab — does the asking price leave room? Rental exit: projected rent minus taxes, insurance, property management, capex, and vacancy — does it cover the mortgage at current DSCR rates with any cushion? BRRRR exit: at 75% of stabilized ARV, does the refi pull out most of my cash?

If two of the three pencil, the deal is strong. If only one, the margin of safety is thin. If zero, walk.

Exit strategy also drives your financing. A hard money loan works for a six-month cosmetic flip and destroys you on a 14-month hold. A DSCR loan works on a finished rental and won’t fund a bombed-out gut. Match the financing to the exit before you match the exit to the property.

Related

70 percent rule, arv, put on the shelf, refinance, dscr loan, brrrr, hard money, four controls