Do you need an exit strategy when investing in real estate?

[Nicholas Wallwork]

It may sound a little bizarre talking about an exit strategy before you have even bought the real estate in question but it is a lot more important than you might think. Each and every asset that you acquire should have been thoroughly researched and acquired for its short, medium or long-term potential with a

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Whenever you buy any investment you should at least have a "fair value" and an exit value in mind. This exit value may go up and down depending upon the property market but at the end of the day investments are bought in order to crystallise a profit at some point in the future.

 

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In some ways not having an exit plan in mind is like going to college for further education but not having a target in mind - you could continue for years but how would the qualifications actually benefit you? Each time you invest in real estate you should have a fair value for the property in your mind and a forecast going forward. In many ways the trick is not to be greedy because while Gordon Gekko said "greed is good" it can prove extremely costly if the market turns!