Mastering the Exit Strategy

As is the case with most private lenders, loans are intended to span short terms (typically 6-12 months). A successful loan typically starts and ends with a solid Exit Strategy. Below, we outline the pivotal role of the Exit Strategy and some examples of what is or isn’t a fit.

Sale of a Property or Properties

One viable Exit Strategy involves leveraging property sales to settle the loan. This approach provides a concrete plan, offering peace of mind to both borrower and lender, assuming the properties in question are marketable.

Refinancing for Long-Term Stability

Post-construction or renovations, refinancing is a logical Exit Strategy. It enables borrowers to transition from short-term private lending to more conventional, long-term financing options, ideally for a longer term and at a lower rate.

Elevating Credit Scores for a Brighter Future

Addressing existing debts to enhance credit scores is a savvy Exit Strategy. By doing so, borrowers position themselves to qualify for loans from traditional lenders, facilitating a seamless transition.

What would not be considered an acceptable Exit?

Waiting for an inheritance, insurance settlements, or leveraging other non-real estate assets would typically not be an acceptable exit strategies.

In conclusion, a strong Exit Strategy is the key to success with private lending. It empowers borrowers and lenders with a clear vision, fostering mutual confidence!