What’s the Best Lesson You Learned From a Deal That Didn’t Work Out?

Question

Most investors talk about their best deals, but I’ve found there’s often more to learn from the deals that never closed or didn’t perform as expected.

For those with experience in multifamily:

What’s one lesson you learned from a deal that went sideways, a deal you passed on, or a deal that simply didn’t meet expectations?

Could be related to:• underwriting• financing• renovations• partnerships• property management• market selection• due diligence

Interested hearing what experiences have shaped the way you evaluate deals today.

Steve Garthe · Answer

My biggest lesson learned was that protecting capital is more important than chasing returns.

Early on, I spent more time looking at upside than downside. Now I spend far more time asking:

• What happens if the rehab goes over budget?
• What happens if the project takes longer than expected?
• What happens if rents or values don't increase as projected?
• What happens if my exit strategy changes?

A deal doesn't have to be perfect to work, but it should still be able to survive when things don't go according to plan.

That shift in thinking has probably saved me more money than any individual deal I've completed.

What’s the Best Lesson You Learned From a Deal That Didn’t Work Out?

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