_1.png)
So, you found a deal—awesome. Now the real question: how are you going to make money from it? You probably already have a plan in mind, but the best real estate investors never go into a deal with just one plan; they walk in with two or three exits ready to go. If you stall with Plan A, Plan B (or C) pays.
This is your beginner’s guide to real estate exit strategies: what they are, why they matter, and how to choose the right one.
So, what is a “real estate exit strategy” anyway?
“Real estate exit strategy” is just another term for your plan to turn a profit from an investment. It could mean assigning a contract (wholesaling), cleaning and relisting (wholetail), renovating and selling (flip), keeping it as a rental (long-term, mid-term, or short-term), or selling with owner financing. Whatever the plan is, your exit shapes every decision you make—what you offer, how fast you move, and who you bring into the deal.
Why having multiple exits matters– especially as a beginner
Having multiple exits is always important, but it is especially important if you’re new to investing in real estate. It doesn’t matter how much good advice you get from mentors or how much research you do; there simply isn’t a substitute for experience. Before you have the benefit of that hard-won wisdom, it’s a lot easier to miss things that a more seasoned investor might pick up on, and rookie mistakes can easily derail plans.
One rookie mistake that is easy to avoid, however, is going into a deal with only one exit strategy! Here are just a few reasons why experienced investors never show up without Plans B and C mapped out and ready to deploy.
Resilience to setbacks - No matter how well you prepare your initial plan on paper, the real world is full of surprises. Rates could move, buyers could ghost, and inspectors could find a bunch of lead paint and asbestos. Options keep you in control when you encounter forces beyond your control.
Negotiation power - Coming to a negotiation with a backup plan shows that you’re a professional who thinks things through, does their homework, and understands what they’re getting into. When you can say, “If retail doesn’t work, I’ll wholetail or owner-finance,” sellers and money lenders take you seriously.
Profit protection - Counting on your luck is a good way to lose money. Banking on a single buyer or expecting prices to continue climbing exponentially is a roll of the dice, not a plan. It’s fine to hope for the best as long as you are prepared for the worst. Remember – one weak plan equals risk, two strong plans equal resilience.
Think of your contingency exits like seatbelts and airbags. Hopefully, you won’t need them—but it’s essential to have them available.
Beginner-friendly breakdown of common exit strategies
1) Wholesale (assign the contract)
What it is: Wholesaling is when you put a property under contract at a discount and then sell the contract to another investor for an assignment fee. That’s it – no renovations, no cosmetic improvements. You simply acquire a discounted property and immediately turn it over for a profit. In some cases, you won’t close on the property, and in other cases, you will close on it and sell the property shortly thereafter with no other investment into improvements.
Why it works and what it works best for: Every real estate investor wants properties at a discount. If you can buy the property at a deep enough discount, then you can offer it to an investor at a price that makes sense for them. This strategy is most effective for individuals who are new to real estate or lack access to cash for property purchases. If you simply need some quick cash, wholesaling is a way to obtain it with little risk.
Pro move: Use your inspection period to find buyers, verify repair costs, and confirm your spread.
What to watch out for: Simple exit strategies can still be easy to get wrong if you don’t do your due diligence. Brush up on your local wholesaling rules and be transparent about access and timelines.
2) Wholetail (clean it up, list it “as-is”)
What it is: Wholetailing is when you acquire a fixer-upper and fix it up just enough to list it on the retail market. A wholetail is NOT a flip. Whereas flipping involves extensive renovations, wholetailing is making quick, cosmetic improvements and then putting the property up for sale.
Why it works and what it works best for: Limiting yourself to cosmetic fixes saves time and money, thus lowering your risk. Sometimes, a simple deep clean is all it takes to make a neglected property’s potential shine through to a retail buyer, and people looking for forever homes will usually pay more than investors looking for flips. This strategy works best when you want to quickly turn a profit on a property with good bones that looks sad and needs a facelift to become more marketable.
What to watch out for: If the plan is to wholetail, wholetail – do not drift into a full flip! This exit strategy works because it limits your improvement costs and allows you to move quickly. Shorter turnaround = lower risk.
3) Fix-and-Flip (retail resale)
What it is: If wholetailing is the short game, flipping is the long game. Rather than improving a property just enough to convince someone else that they should renovate it, fix-and-flip is doing the full renovation yourself and then selling the property in turnkey condition.
Why it works and what it works best for: Renovating a home is a pain, and people who can afford it will pay a lot more for a ready-to-move-into property that won’t be under construction for the next 18 months. Flips work best when nearby comps are strong and your all-in cost leaves 10 - 15%+ of after-repair value (ARV) when all’s said and done.
What to watch out for: Flips are riskier than wholesale and wholetail deals because you’re sinking a lot more time and money into the property before selling. Keep the scope of your project limited to improvements that will add the most value, and be cognizant of challenges such as contractor delays and interest carry. Also, keep in mind that short-term holds are often taxed at ordinary income, and you should always talk to your CPA.
4) BRRRR / Long-Term Rental
What it is: When investors say BRRRR it’s not because they feel cold. They’re talking about a strategy where you Buy → Renovate → Rent → Refi → Repeat in order to keep an investment property and recycle capital. In other words, you buy a discounted property, fix it up, rent it out as long-term housing, and refinance for better terms.
Why it works and what it works best for: This strategy enables you to acquire property at a discount, increase its value through renovation, convert it into an ongoing source of cash flow, and refinance once it starts generating income. It works best in landlord-friendly submarkets with steady rent demand when you’ve already got your financing lined up.
What to watch out for: BRRRR can sound like a fool-proof plan, but it only works under the right conditions. Things like appraisal risk and CapEx (roof/HVAC/plumbing) can instantly make your initial calculations obsolete. Make sure you run real numbers and don’t try to force this strategy if the math doesn’t add up.
5) Mid-Term Rental (MTR - ~3-month stays)
What it is: Mid-term rentals are furnished housing for people who need somewhere to live for a few months (90+ days). Think travel nurses, contractors, etc.
Why it works and what it works best for: People who are under contract to work in a city for a few months aren’t in a position to sign a 12-month lease or pay for 90 nights at a hotel. If you’ve got property near a hospital or large corporation that frequently sends managers from other offices to work on limited projects, you can really capitalize on the need for mid-term lets.
What to watch out for: Renting a place out fully furnished means that you have to factor furnishing costs into your wear-and-tear calculations. Be prepared for gaps in occupancy as well. If the demand for mid-term housing is largely seasonal (i.e. exists primarily in the summer), you might want to re-consider this option.
6) Short-Term Rental (STR/Airbnb)
What it is: Short-term renting is when you let out your property for nightly or weekly stays. Instead of being a landlord, you are an innkeeper, and your business operates like a hotel. This means advertising the property with professional photos, supporting guests, and cleaning and inspecting the property after each turnover.
Why it works and what it works best for: STRs are obviously a lot more hands-on than MTRs or LTRs, but they can also be very lucrative since you’re charging nightly rates. They work best in tourism / event hubs or if you have a property with an experience baked in (theme, cabin, treehouse, etc.).
What to watch out for: If you’re going to use this exit strategy, you need to understand that you’re shifting from real estate investment into the hospitality business. It’s not as simple as taking a few iPhone photos, listing on Airbnb, and calling it a day. You need to be versed in local regulations, aware of turnover costs, and prepared to offer guest support. If running a hotel isn’t for you, skip it.
7) Owner / Seller Financing (you become the bank)
What it is: Owner/seller financing is when you, as the seller of a property, loan the buyer the money required to purchase said property. Basically, you become the mortgage lender instead of a bank. You sell the property as-is, with the buyer putting in a down payment. The buyer handles repairs and makes monthly payments while you collect the principal + interest.
Why it works and what it works best for: This strategy enables you to avoid fees and middlemen and negotiate terms that work for both you and the buyer. Additionally, you earn money on both the sale and the interest, thereby increasing overall profitability. This can be a great option for negotiating better sale prices in a buyer’s market. It can also be useful for offloading odd properties by widening your pool of potential buyers.
What to watch out for: You’re assuming the default risk of the buyer, so don’t just settle with a handshake. Get the proper docs, sort out escrow taxes and insurance, and use an attorney. Make sure the terms you agree to will offset risk as much as possible, and try to get a good chunk of money up front. Bigger downpayments = fewer headaches.
8) Lease-Option / Rent-to-Own
What it is: Rent-to-own is an agreement where tenants are given the option to buy a property at the end of their lease in exchange for a small up-front fee and a premium on top of regular rent payments.
Why it works and what it works best for: Most people don’t want to rent forever, but saving up a down payment and qualifying for a mortgage can take a long time. If you have a property sitting on the market, offering a rent-to-own option can connect you with those buyers who need more time to qualify for financing and will generate cash flow by making them your tenants in the meantime. This works best when you’ve got a house that is move-in ready and a tenant who’s interested in the scheme.
What to watch out for: Having a rent-to-own tenant isn’t the same as having a buyer. Whether it’s because they still can’t get a mortgage at the end of the lease or they’ve simply changed their mind, many tenants don’t exercise the purchase option. Ensure that you clearly spell out credits, deadlines, and conditions to avoid wasting your time.
9) House Hacking
What it is: House hacking is when you turn a property into both your home and an investment. You live in one unit/room, then rent out the rest.
Why it works and what it works best for: House hacking is a great way to lower your personal monthly expenses. Why pay a mortgage when you can rent to other people who will pay it for you? This is a great strategy if you own a multifamily property (duplex/triplex/quad) or a single-family rental with an ADU or basement.
What to watch out for: Renting to people is one thing; living in the same building with them is another. Make sure your tenants are a good fit. You’ll also need to check on local zoning laws and chat with your CPA about tax planning.
How to pick your exit (fast decision cheat sheet)
Ask these five questions before you sign a deal:
Speed: Need cash in 30 days? → Wholesale or wholetail
Condition: Light, ugly, or heavy rehab? → Wholetail vs. Flip
Rentability: Solid rent comps and landlord-friendly area? → BRRRR / Long-Term Rental
Location drivers: Near hospitals/employers or tourism? → Mid-Term Rental (MTR) or Short-Term Rental (STR)
Buyer pool: Lots of non-bankable buyers with down payments? → Owner Financing / Lease-Option
If only one box checks out, renegotiate or walk.
“Napkin math” you can do in two minutes
How do you know if an exit strategy is viable? You need to be able to size up a deal. Here are some quick calculations to save you time.
Flip MAO (Max Allowable Offer):
MAO ≈ (ARV × Target %) − Rehab − Selling / Closing − Carry − Your Profit
(Target % is your cushion—many beginners use 70–75% of ARV as a starting point, then adjust to your market.)Wholesale sanity check:
Leave your end buyer 10–15% ARV margin after all costs. If they can’t win, you won’t sell the deal.Rental quick screen:
Cash flow after vacancy (5–8%), ops (30–40%), CapEx reserve, and debt. If it’s thin, consider MTR or owner finance.
One property, multiple ways to win (example)
You’ve found your discounted property, now you need to come up with Plan A for turning it into profit– and Plan B in case it goes sideways. The example below illustrates how to sketch out different scenarios for a single property, allowing you to narrow down the best exit strategy and explore your contingency plan options. To make things simple, assume the investor is paying cash and the market is stable.
Purchase: $100,000
Light clean (wholetail): $6,000
Full rehab (flip): $35,000
ARV: $200,000
Wholesale: Contract at $100k → assign at $115k → ~$15k fee
Wholetail: All-in ~$106k + ~$15k selling / holding → list $169k–$175k → ~$20k–$30k net
Flip: All-in ~$155k → sell $200k → ~$25k–$35k net after costs / carry
Owner Finance: Sell as-is at $149k, 10% down, 10% interest, 20-yr amort → steady cash flow with minimal repairs
BRRRR: Stabilize rent ~$1,800/mo → DSCR refi → keep cash-flow + pay down
Remember, this is just an example. Financing and markets will vary, and the viability of these exits will also vary based on those factors. For instance, if you’ve acquired a property using a hard money loan, you’re not going to offer owner financing.
Common beginner mistakes (and easy fixes)
Only one exit - Simple– always have at least one backup plan before you sign on the dotted line. If there’s only one way out, don’t buy.
ARV optimism - Use conservative comps. Look at recent sales of comparable properties– same bed / bath, year band, neighborhood, etc.– to get a realistic range. You can hope for a sale price at the top of that range but make sure you plan for the bottom.
Scope creep - Stay focused on repairs and renovations that add the most market value to your flip. Remember, the goal is to sell the property, not move in yourself. Renovate to the buyer profile instead of your Pinterest board to keep extras from eating your profits.
Forgetting soft costs - Double check that you’ve budgeted for utilities, insurance, dumpsters, interest, closing fees– everything. $80 a month here and $250 a month there quickly adds up to thousands and you don’t want to get caught off guard.
Tiny downpayments (owner finance) - Just don’t do it. A buyer who hasn’t put any money down doesn’t have much to lose and is more likely to flake. Negotiate a proper downpayment or walk away. Bigger downpayment = bigger commitment.
No / bad photos - Think about it– you don’t assume a listing only has one blurry photo because the property is just too nice, do you? No, you assume whatever horrors are being hidden probably aren’t worth your time and you keep scrolling. Professional photos sell wholetails, STRs, and even rentals. Get them.
Quick start checklist
Define your buy box (zip codes, price band, beds/baths, year built).
Pull true comps and a real repair scope (+10–15% contingency).
Model 3 exits with conservative numbers.
Line up funding (hard money / private money) before your offer.
Lock in title + insurance details and correct paperwork (assignments, options, notes, deeds).
Track every deal (before/after, net sheet). That’s your pitch deck for private lenders.
FAQs
What’s the fastest way to get paid on my first deal?
Wholesale. It’s the lowest cash outlay and quickest learning curve.
If retail buyers cool off, what then?
Pivot to wholetail, owner finance, or rental. Options are your oxygen.
Is short-term renting worth it?
Yes— IF your area allows it and you run it as a hospitality business (cleaning, messaging, dynamic pricing, five-star photos).
Bottom line
The key to success in real estate investment is coming into every deal prepared. Markets can turn, buyers can flake, and you need options that keep you in the driver’s seat. If you only have Plan A, you don’t have a plan. Remember to account for every possible scenario, not just the best-case scenario, and always have a Plan B.
