What hidden costs killed a deal you were excited about?

Question

Flood insurance. Every time.

A riverside property in New Hampshire can carry $1,200 to $2,000 a year in flood premium — and it won't be anywhere on the seller's pro forma. It's also often the reason a property has been sitting on the market for six to eighteen months with no explanation anyone can articulate.

The other two I see constantly: property tax reassessment after transfer (expect 30% if the property hasn't sold in years), and heat costs when the landlord pays (roughly $500/month on a 3- or 4-unit in the northeast).

None of these are hidden — they just don't show up until you build the expense stack yourself. That's the job.

What's the expense that got you on a deal you thought you had figured out?

Romina Gonzalez · Answer

The tax reassessment one catches so many people off guard, especially on value-add deals where the purchase price jumps significantly from the last sale. Have you found a reliable way to model that upfront before you're deep into underwriting?

Stacy Raskin · Answer

Not knowing the local landlord tenant law for where an investor is buying a property. Not an upfront cost like property insurance but can significantly impact an investor's returns depending on how friendly or unfriendly local, county and state landlord laws are. Among other important issues, these regulations will usually dictate potential rent increases or if necessary how an eviction is handled.

Andrew Bosco · Answer

good catch. When they break - they go! Knob and Tube is also a big one.

Gregory Chadwell · Answer

Buyer beware:  Ive heard people saying "I'm not going to pay that ill just sell it"

Pete Langford · Answer

Cast iron pipes. Bought a fourplex on the South Side and the inspector flagged one stack as corroded but functional. Six months in the whole thing backed up into the first floor unit. Ended up being 14k to replace both stacks, and that's with my son doing the demo. Milwaukee building stock is all 1920s and the cast iron is on borrowed time in most of these places.

Pete Langford · Answer

Yeah it's one of those things nobody talks about until it hits them. Most guys check the furnace and the roof but nobody scopes the drain stacks. And yeah knob and tube is the other one, my insurance company flags it every renewal and the rates keep climbing because of it.

Andrew Bosco · Answer

rough

Christopher Tile · Answer

Great point here - I'd say this is one of, if not the top one.

What hidden costs killed a deal you were excited about?

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