We Walked Away from 14 Deals Last Month. Here Is Why.

Brokers love optimistic spreadsheets. Last month, our team reviewed 16 off-market multifamily properties across Arizona and Florida. We walked away from 14 of them within two hours.

Here is what actually happened on a 48-unit property in suburban Phoenix. The offering memorandum claimed a 6.2% cap rate based on 'projected' expenses. It looked great on paper.

Then we asked for the real bills.

Property insurance had jumped from $650 per unit to $1,420 per unit over two years. The seller simply ignored that jump in their pro-forma. When we plugged in real utility bills, property taxes, and realistic maintenance costs, total operating expenses hit 51% of gross rents.

The true day-one cap rate was 4.9%. With debt at 6.1%, the property would lose money every single month. The buyer would have to pay out of pocket just to service the mortgage.

The 15-Minute Deal Screen

Before you spend money on inspections or attorneys, run these three quick checks:

• Apply the 50% Rule First: Deduct half of gross collected rents for operating costs. If the remaining cash flow cannot cover debt service by at least 1.35x, stop looking.
• Demand Actual Trailing-12 Invoices: Never trust a broker summary. Ask for the utility bills, trash contracts, and insurance declarations directly.
• Check Replacement Cost: If the asking price is $190,000 per door and it costs $220,000 to build new next door, you have built-in safety. If it is $280,000, walk away.

Disciplined investing is mostly saying no. You do not get rewarded for doing deals. You get rewarded for doing deals that survive bad years.