My team and I had an LOI signed on a 50-unit deal in eastern Texas. The numbers looked great. We had talked the seller down about 20% from his asking price and were positioned for a 21% IRR on a three-year hold. It felt good to find a real deal in this market.

Then we did a round of in-person due diligence.

I know from experience that a property is never as nice as the seller describes. This one was worse than that. It needed at least $100k more in renovations than we had budgeted. On top of that, the seller failed to disclose five vacancies that had occurred the week prior. Those vacancies killed the day-one cash flow that our team treats as non-negotiable.

The seller wouldn't move further on price to account for the lower value. Just like that, the deal was dead.

Was it a waste of time? You could look at it that way. I'd rather look at what it confirmed: photos and rent rolls tell you what the seller wants you to see, and boots on the ground tell you what you're actually buying. We got the reno gap and the vacancy problem for the price of a trip instead of finding out post-close.