A deal that did not work and what we learned

[Yair Dorman]

We lost money on this deal before we even owned the property.

A while back we looked at a property on Dove St in Charlotte.

It was a house sitting on a large piece of land, and our plan seemed straightforward:

buy the property, sell the existing house, and divide the remaining land to build another home.

But the seller had one condition.

He wouldn’t sign a contract unless we put down non-refundable due diligence money in cash.

We agreed and moved forward, making it clear from the beginning that our goal was to divide the lot.

Once we started the surveys and due diligence process, we discovered something that completely changed the deal.

The septic system was located exactly on the portion of the land we planned to divide.

Which meant the subdivision wouldn’t work.

What made it more frustrating was that the owner already knew about it.

In the end, the deal didn’t move forward.

We lost the due diligence money, along with the time and cost of figuring out what was really going on.

Experiences like this taught us something important.

In many cases where sellers insisted on non-refundable deposits upfront, we later discovered there was something hidden in the property.

That’s why today our land acquisitions go through extensive due diligence and long checklists before we move forward.

Sometimes the most valuable deals are the ones you decide not to do.