What’s the Biggest Difference Between Good Deals and Deals That Actually Close?

Question

One thing I’ve been noticing lately is there seem to be a lot of multifamily deals that look decent at first glance, but far fewer that actually make sense once financing, reserves, repairs, and execution risk are factored in.

For those actively buying right now:

What do you think separates deals that actually close from the ones that just sit on the market?

• unrealistic seller expectations?• debt terms?• weak underwriting?• insurance/tax increases?• lack of operational upside?• buyers getting more conservative?

Would be interesting hearing what experienced investors are seeing in today’s market.

Bryce Jamison · Answer

You got it. Interest rates are remaining in the low to mid 6s, sellers still want pandemic prices, increased apartment buildings increases competition for renters, and the cost of insurance and maintenance is increasing.

Folks are still investing, it just takes more property searching, more offers, and more negotiation.

Some investors, like myself, are actively searching for their next property, but are simultaneously increasing their savings, paying down debt on other properties, and investing in other assets like stocks. I'm also starting to value more long term appreciation potential over cash flow as well as considering putting more down on properties.

J Castro · Answer

Hi @Dalton Mongold, welcome to BP!In today’s market, the biggest difference between a deal that looks good on paper and one that actually closes is simple: whether the numbers still work after applying real-world assumptions.

A property may appear attractive based on the broker’s pro forma, but once you account for financing costs, insurance, taxes, reserves, deferred maintenance, and a realistic exit strategy, many “good deals” no longer pencil out.

Here are the factors I see most often separating closed deals from listings that sit:

1. Seller Expectations vs. Market Reality

Many sellers are still pricing assets based on 2021–2022 valuations, while buyers are underwriting to today’s higher interest rates and tighter margins. If the seller is unwilling to adjust, the deal usually stalls.

2. Debt Terms

Financing plays a major role. Higher rates, lower leverage, reserve requirements, and stricter DSCR thresholds can materially impact returns and cash flow.

3. Conservative Underwriting

Experienced investors are stress-testing every assumption. If the deal only works under perfect conditions, it is unlikely to close.

4. Insurance and Property Taxes

These two expenses have become major variables, especially in states like Florida, Texas, and California. Underestimating them can destroy projected returns.

5. Limited Operational Upside

If there is no meaningful opportunity to increase rents, reduce expenses, or improve operations, investors have little room for error.

6. Execution Risk

Heavy renovation, tenant turnover, permit delays, and management challenges can significantly impact timelines and profitability.

7. Strong Sponsorship

Deals close when buyers have the liquidity, experience, and financing relationships needed to perform with confidence.

My Perspective

The best deals today are not necessarily the ones with the highest projected returns—they are the ones with:

• Conservative assumptions
• Multiple exit strategies
• Adequate cash reserves
• Realistic timelines
• Sellers aligned with current market conditions

If a deal works under today’s financing environment and still produces acceptable returns with built-in contingencies, it has a strong chance of closing.

In this market, discipline wins. Investors who underwrite conservatively and remain selective are the ones consistently getting deals to the closing table.

G. Brian Davis · Answer

Hi Dalton I feel like I might have answered this somewhere or maybe I meant to answer. I've co invested in multifamily quite a bit. it's really just about having disciplined underwriting, realistic seller expectations, and understanding execution risk. Debt terms and operational upside make a big difference, and being conservative as a buyer helps avoid surprises in today’s higher rate environment.

What’s the Biggest Difference Between Good Deals and Deals That Actually Close?

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