How to Avoid Bad Real Estate Deals (Without Becoming a Guru)

Most people don't lose money in real estate because they're reckless. They lose money because they accept assumptions without making them earn their place.

A deal that almost works feels convincing. The spreadsheet is close. The broker sounds confident. The upside feels reasonable.

But "almost" is where most financial damage lives.

Reality vs. Hope

A good real estate deal survives reality as it exists today.

A bad deal needs the future to cooperate.

This distinction matters more than market cycles, interest rates, or timing. Strong deals tolerate vacancies, repairs, rate changes, and slow growth. Weak deals collapse when a single assumption fails.

This is why experienced investors say no far more often than yes.

The Reality Check

• ✓ Does the deal work at today's rent, not projected rent?
• ✓ Can it survive at least 10% vacancy?
• ✓ Are repairs and maintenance realistic, not optimistic?
• ✓ Can you explain the deal clearly in under one minute?

Cash Flow vs. Appreciation

Many investors confuse cash flow and appreciation, treating them as equal contributors to success.

They aren't.

When appreciation becomes the reason a deal works, risk is being ignored. When cash flow is thin, leverage does dangerous work in silence.

The Hard Questions

• ? If appreciation disappeared, would the deal still function?
• ? If rents stayed flat for three years, could you hold?
• ? If interest rates rose, would leverage magnify pain?
• ? If refinancing were delayed, would the deal survive?

The Real Goal

The goal in real estate is not to move fast.

The goal is to stay solvent long enough to get better.