33 Guidelines for investing in real estate..........

Guideline #31:  Have a plan for the future in mind.

Don't think of it as an exit strategy.

Friend Tony once told me that the first or second rule in investing was to have an "exit strategy."  When he first posited that, I nodded my head and said, "of course."  The more I thought about it though, the more doubts I had about it.  As Teacher Furman was fond of saying about the stock market, "its great advantage is its liquidity; you can take your losses at any time."  Exit strategies are a bit tougher in real estate, for Mr. Market will on occasion decide not to cooperate.

Warren Buffet, surely the premier investor of our time, doesn't appear to have any "exit strategy."  Then there is the example of three extremely successful local real estate investors:  they haven't sold anything for forty years, and have no plans to sell now.  Their estates will handle the exit from their real estate holdings.

Friend Pat solved my conundrum by suggesting that an "exit strategy" was nothing more than a plan.  A plan that elaborates on Guideline # 2 (know why you are investing), assumes you pass Guideline #8 (survive the first investment), and takes Guideline #17 seriously (what you do matters), believes in Guideline #29 (don't eat your seed corn), and then projects out five, ten, or fifteen years.

I like that approach.  Our plan has evolved.  We invest for both cash flow and capital appreciation.  We like creating things that are not there now.  I like fixing old buildings, my business partner likes putting up new buildings.  A time or two we have speculated.  Mostly we look for opportunities that appeal to us.  Truth be told, our best investment opportunity ever just came looking for us one day when we were busily working on something else.  Economic circumstances have on occasion called for an adjustment to our plan.  That is just part of the adventure.  We have fun and feel good about what we are doing, and do not plan on stopping any time soon.   I suspect our children will execute our exit strategy from investment real estate.