The first thing you do in any investment is to decide what type of investment it will be and what you’re going to do with the property. Will you turn the deal over to another investor for a quick finder’s fee, or will you fix the property up and sell it retail to a homebuyer who will live in it. Maybe you’ll want to keep the property as an income-producing rental, or maybe you’ll create a no money down deal for yourself to live in.

How you plan to complete the deal is commonly referred to as knowing your “Exit Strategy” and is a term used by real estate investors to describe how they plan to sell a property and make a profit.

Know Your Exit Strategy Going Into The Deal

You should always know exactly what you are going to do with a property before you buy it. You’ll also never want to make an offer on a property unless you know exactly what you are going to do with it if the offer is accepted; nor will you ever buy a property and then figure out what to do with it after the fact.

How you go into a deal many times will affect your exit strategy or how you go out of the deal. In other words, if you pay all cash for a property, you may not be able to keep that cash tied up for a long period of time. Therefore, you would either need to flip the property to another investor for a fee, fix the property up and retail it to a home buyer, or refinance the property to get your cash back.

Choosing The Right Exit Strategy

Your exit strategy is based on three main factors. These factors are: your personal goals, the seller’s needs, and the property itself.

Your Goals

First of all, your goals are very important when deciding what types of investments to do. For instance, is your immediate goal to make some quick cash or to build a retirement nest-egg? If your goal is to build a monthly residual income, you’ll have to consider the exit strategies that produce a monthly income, such as Lease Options or rentals. If your goal is to make some quick cash, you’ll have to consider doing some wholesale or retail deals.

The Seller’s Needs

You’ll also need to consider what the seller’s needs are. Is the seller a bank needing all cash or is the seller a private individual simply looking for debt relief.

For instance, if you are looking to lease a property with an option to buy, bank owned properties are not good prospects because most banks are looking to sell for cash, especially when the property needs work.

The Property

Finally, you must analyze what type of investment a property is most suited for. Is the property in a resalable area suitable for selling to a homebuyer, or is the property located in an area that is better suited for rentals. You don’t want to be rehabbing and retailing a house that is in a war zone, for example. Does the property need repairs and are you prepared to have them done?

Don’t worry if you think that deciding on an exit strategy is complicated. Once you know and understand the Deal Quadrants, deciding what to do will be pretty easy.

By: Charlie Bross – Excerpt from the Real Estate Investing Quadrant Success System

The housing crash and the subsequent foreclosure crisis has saddled the United States with an extraordinary level of vacant properties, inflicting heavy costs to many American communities, according to Federal Reserve Board Governor Elizabeth A. Duke.

“In order to see the robust economic recovery we all want, we need to deal effectively with the large volume of vacant and distressed properties throughout the country,” said Duke. “The potential fallout of high rates of vacancy — blight, crime, lowered home values, and decreased property tax revenue — is the same for every neighborhood and community. In some areas, the private market will lead the way, while in others government will have to use precious resources wisely to catalyze recovery.”

As of the first quarter of 2013, there are just over 133 million housing units in America and 10.7 percent of them — more than 14. 2 million — are vacant all year round for some reason or another, according to the Census Bureau.

A recent study by Realty Trac found that 45 percent of those empty foreclosures didn’t have a forwarding address. Florida leads the nation in vacant foreclosures, with 90,556. Illinois came in second with 31,668 empty distressed homes, followed by California with 28,821, and Ohio with 17,367 vacant properties.

Vacant homes are not just an isolated issue. Communities throughout the industrial Midwest struggle with vacant housing every day. In Cleveland, there are thousands of homes beyond repair in Cuyahoga County, primarily in Cleveland and East Cleveland, writes Jim Rokakis in the Cleveland Plain Dealer.  There are so many derelict, severely blighted vacant properties that the city has started demolishing thousands of properties. In Columbus, there are 6,000 vacant and abandoned homes.

In Las Vegas, there are 40,481 vacant single-family homes, according to a study by Luis A. Lopez at the University of Nevada, Las Vegas. The study found that 8.4 percent of the 482,272 single-family homes in the Valley were vacant. Las Vegas also has 16,542 empty condominiums, or 20.6 percent of total inventory, and 5,137 vacant townhouses, or 12.2 percent of total inventory, according to the UNLV report.

And in Detroit the numbers of vacant properties are staggering. Once America’s capitalist dream town, Detroit now leads the nation with an estimated 79,000 vacant homes. Teetering on bankruptcy, the city of Detroit is unable to handle the avalanche of vacant homes, many slated for eventual demolition.

Part of the problem with vacant homes is that America’s home ownership rate is falling at an alarming pace, from 69 percent in 2004 to the current 65 percent in Q-1 2013, according to the Census Bureau.

Nearly 11 percent of houses in America are empty, making them a potential haven for criminals, as well as an eyesore for neighbors and a disaster for local governments, which are losing their much-needed property tax base. Vacancies have also lowered property values of surrounding properties in many communities.

So, what should be done with the millions of vacant houses in America? Should they be demolished? Should they be rented to the homeless? Or sold to investors?

By Octavio Nuiry