Ok so you think you’ve done your research and have found a foreclosed house listing that you believe will be a great deal to invest in. You look at what the house is worth and what is the minimum bid to buy the property (or what is owed on the house in order to pay it off in full). But do you really know whether the deal that you are looking to invest in, is truly a bargain? Can you really stand to profit from it?
What is your exit strategy? In other words, what are you planning on doing with the property once you have it under your control or under your possession? Are you going to fix it up and flip it? Or are you going to rent it out? Or are you going to reassign the contract to another real estate investor?
Having an exit strategy is extremely important, as this can make or break the profitability of the entire deal. In fact, it is so important to have an exit strategy, that you should make sure that you have it planned out before you acquire the property. If, in the course of researching each and every foreclosed house listing, you evaluate the exit strategies you have available to you, and you determine that you could actually end up losing money at the time that you go to resell it, or that your rent would not cover your mortgage, then it may not be a good deal to invest in after all.