With investments, how do you determine your exit strategy? It shouldn’t be until death do you part.
In a recent conversation, someone was sharing his latest ‘top stock picks’ with me. He was excited to tell me how they are going to pay off big. But one question stopped him in his tracks.
I simply asked, “What is your exit plan for those stocks?”
“Sell them at their peak… hopefully,” he said with uncertainty.
“Good luck with that,” I said.
With investments like stocks and precious metals, there is no defined exit strategy. It’s all a matter of timing when to sell in order to take your profits or cut your losses.
There also isn’t a schedule for when you will receive a return on the investment or principal.
Defined Exits = Greater Certainty
Our investors at Nighthawk prefer a defined exit strategy.
An equity investment in a multifamily syndication will typically have a defined exit strategy – that being the sale of the property after so many years of operation (e.g., 3, 5, or 7 years, etc.).
As multifamily operators, we can predict, with confidence and reliability, expected returns for investors based upon recent and historical data, along with market demand.
The advantage to investors who go into an investment with a defined exit strategy and with defined returns is that they can plan their own wealth strategies with confidence.
This allows investors to plan their financial future, like retirement, college for their children, and other major life events.
Defined Exits = Defined Milestones
One of the most positive elements of investments with defined exits is defined milestones – the intervals between the start of an investment and the exit in which investors can expect to receive returns.
With multifamily syndications, the sale of a property is not the only time in which investors can expect a return on their investment. Besides the return on the sale of the asset, investors can also expect to receive distributions quarterly or annually from a portion of the cash flow from operations. Some syndications may also provide for a partial return on investor capital upon refinancing of a property as well.
And the bonus is that we can even define the tax benefits our investors will receive.
Some multifamily operators are offering a debt offering to their investors, which offers more certainty, simply because the returns are not based on projections. For example, when you invest $300,000 for 3 years, you’ll receive $30,000 annually.
Defined Exits Eliminate Anxiety
With investments like stocks and precious metals, investors are driven by their emotions – constantly checking the charts and constantly second-guessing their decisions or non-decisions. Trying to determine when to sell a stock or gold investment requires your time and attention or communicating with your financial planner often.
We’ve found many investors investing in syndication have less anxiety and concerns day to day about their investment. The market cycle is much slower and they do not have to read or watch the financial news with concerns about their wealth dropping 30% overnight.
Add Certainty to Your Portfolio
If you prefer keeping up with all the latest news to determine your exit strategy, syndication may not be for you. If you’re looking to enjoy life doing what you want to do with fewer concerns about the markets, find out about our upcoming investments and their defined returns and return of principal.
With a defined exit strategy, you know what you’re getting into when you get in and what you can expect to get out of your investment when you get out.
Invest with less stress and add certainty to your portfolio before 2024.
If you are interested in joining our investor club, schedule your call at this link: https://nighthawkequity.com/join
