In fact, this may be a misleading title, as I intend to argue that there are very few viable exit strategies for buy and hold real estate investors. For most entrepreneurial businesses, you invest some capital, earn a profit, and reinvest those profits to grow your business; once the business is big, profitable, and sustainable enough, you can sell the whole production to an interested buyer, who will pay some multiple of your yearly earnings. This is great: invest, work hard, get bought out of all your responsibilities and laugh your way to the bank.
Unfortunately, real estate does not work this way. Neither does practically any trade which requires the inherent skill and experience of its tradesman in order to be successful. A doctor cannot simply sell his surgery clinic to a wealthy passer-by, and expect it to continue to operate effectively. A surgery clinic needs a surgeon at its helm, just like a buy-and-hold or flipping company needs to be run by someone with expertise in that field and market.
What’s more, real estate investment businesses tend to not be perceived beyond the value of their real assets. In other words, people don’t view investment firms as legitimate businesses, but rather as individual investors who have a certain amount of worth based on the amount of property they own. Therefore, an investor cannot simply sell his business—he has to sell his real assets. This, too, is highly unlikely, since it would be very difficult to find another investor who is willing to buy your portfolio or properties at market value (or anything reasonably near that might earn you a profit, for that matter).
So if you can’t sell your business, and you can’t cut-and-run by dumping all your assets on to one buyer (effectively selling your business), then how do you get out? The simple answer is, you can’t. If you are invested deeply enough in real estate, it will usually not be worth your while to get out (unless you are losing money). There are two basic options for disgruntled investors: sell your properties one by one and liquidate your business, or make your business run with as little involvement from you as possible. Option 2 basically means automate your business to operate without your having to work (this is like retiring with benefits, is it not?). Make a very clear plan of who in your business is to do what task and how, map out the relationships among those jobs and employees, and try to delegate all responsibilities that were once yours, save those which require your particular set of expertise and experience.
Although it is difficult in real estate to simply get up from the table and walk away rich, there are ways to continue earning a profit from your investments while minimizing your amount of involvement in them. Create an efficient, self-sustaining system in your business by which everyone has a set of tasks to accomplish, and no task is left unaccounted for. That way, instead of simply walking away from the industry, you can focus your time, money, and energy on other projects, while continuing to earn monthly income from your real estate assets. The best option for successful buy and hold real estate investors is to simply own their business forever.