Exit Strategy
Deciding how you'll eventually sell, exchange, refinance, or transfer the asset before you ever buy it.
AuthorKitsey Behrman
01
What It Means
An exit strategy is the plan for how this investment eventually ends: a sale, a 1031 exchange into something else, a refinance that returns your capital while you keep the asset, or a transfer to family through an estate plan.
It includes the conditions that would trigger the exit — a target value, a lease expiration, a loan maturity, a change in your own circumstances — not just the method.
02
Why It Matters
Commercial buyers are a smaller pool than residential buyers, especially in rural markets. How easily you can sell is part of the asset's risk, and it should be considered before you buy.
The exit also shapes ownership decisions along the way: which leases you sign, how you finance, when you make capital improvements, and how you hold title.
03
Questions to Ask
- Who is the likely buyer for this property in five to ten years?
- Does the loan's maturity align with my intended holding period?
- What would need to be true for this property to sell at my target value?
- Would an exchange, refinance, or outright sale serve my goals better?
- How does this asset fit into my estate and succession plans?
04
Common Mistakes
- Buying without knowing who would eventually buy it from you.
- Signing leases that expire right when you plan to sell.
- Letting a loan maturity dictate a sale in a weak market.
- Deferring estate and entity planning until a sale is underway.
05
Run the Numbers on Your Own Deal
Adjust the inputs to see how this concept behaves with your property's numbers. Nothing is saved and no sign-up is required.
Calculator
Seller Net Proceeds Calculator
Estimate what you may walk away with at closing after payoffs, brokerage compensation, closing costs, credits, and prorations.
Sale and payoffs
Brokerage compensation
Enter compensation as
Closing costs and credits
What this result means
Net proceeds are what is left from the sale price after everything owed at closing is paid — loan and lien payoffs, brokerage compensation, title and escrow charges, recording and transfer fees, any credits or concessions you agreed to, and prorated items like property taxes and HOA dues.
Actual closing figures depend on the contract, the title work, the taxing authority's calendar, prorations as of the settlement date, any liens or judgments discovered in title, payoff statements with per-diem interest, and the final settlement statement prepared by the closing office. Sellers are often surprised by prorations and payoff interest more than by the larger, more obvious costs.
Use this to plan — to test whether a price range supports your next purchase, or what a concession request would actually cost you — and then confirm the numbers against a preliminary settlement statement before you rely on them.
Estimates for education only — confirm figures with your lender, CPA, and other professionals.
06
Working With the Right Professionals
The most successful real estate decisions often involve collaboration between several professionals working toward the same goal. Understanding each person's role helps you ask better questions and make more confident decisions.
- Accountants, CPAs & Tax Professionals
- Qualified intermediaries (1031 exchanges)
- Estate planning & probate attorneys
- Commercial Real Estate Appraisers
Western Edge Property Group provides these local resources as a convenience to help you begin your own research. Inclusion in this directory does not constitute an endorsement or recommendation. We encourage you to interview professionals, verify qualifications, and choose the provider who best meets your individual needs.
07
Related Articles
Concepts that tend to come up in the same conversation.
- Cash FlowWhat's left after the property pays its own bills — and why it's the number that determines whether an investment is comfortable to own.
- Return on Investment (ROI)A plain-language look at what ROI measures, what it leaves out, and how to compare it honestly across opportunities.
- Cap RateHow capitalization rate relates net operating income to price, and why the same cap rate can mean very different things.
Continue the conversation
Have a question about this concept?
Every property and every investor is different. If this raised a question worth answering before you decide, I'd welcome the conversation.