28A – Your Exit Strategy
Once completing the development project, I would plan to sell the condominium units within it. By selling the condo's within the center, if structured to profit enough, the profit I generate on the sale of condo's can help to pay off the construction loans and mortgages for other components of the lifestyle center, such as the retail and/or hotel facilities. By doing so, I will be able to maintain a position in the retail component of the center highly under leveraged to produce as much COC *(cash on cash) return as possible on the development. Holding a majority of the property, I would intend it to keep it forever for generations to come. The reason for this is that once stabilized this would generate an income flow forever ( providing we continue to innovate on the property) Having this strategy would influecne my decision to focus on the retail component more, however product condo's that are sellable and in turn greatly built condominiums for people to live in.
Hey Michael,
ReplyDeleteI enjoyed reading your post. Indeed I do think that keeping the development project can be beneficial as once developed it will provide a consistent revenue without hardly any work. However, I think you should take into consideration the fact that over time, you will have to invest additional money in them as they will deteriorate over the years. You need to consider this additional investment and analyze in the long run is worthed or if reselling the whole complex is more beneficial.
Hi Michael, I think you have a really thought out exit strategy. Your already extensive knowledge of your business shows that you seem to know exactly when the best opportunity to exit will be. I really enjoyed reading your post and think you have ideally everything figured out. I think that your idea will allow you to get the most out of your business venture and I wish you all the best if you do choose to pursue this in real life.
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