The $200K Lesson: When a "Good Deal" Goes Wrong

Let me tell you about a time when one of my business partners thought he had struck gold, only to end up losing $200K on a deal that seemed like a no-brainer.

It was a 30+ unit apartment building he picked up for just $15K per door back in 2006. At first glance, that price seemed like a steal. But there was a catch—and it was a big one.

The building sat in an “F” neighborhood. Think about it: a place where 90% of the city's violent crimes happen. Even before signing the deal, there was a glaring red flag: no property management company in Cincinnati wanted to touch it. He called every single one. Not one said yes.

Still, he went ahead. Cheap property, right? But cheap doesn’t always mean profitable.

The tenants he brought in? A nightmare. They’d move in, pay the first month’s rent, and then skip out on payments while trashing the units. It spiraled downhill fast. Rent wasn’t coming in. Repairs piled up. And before he knew it, the property was in foreclosure. That $200K of his money—and his investors’—was gone.

Here’s the lesson: Real estate isn’t just about getting a “good deal” on paper. . You’ve got to look deeper:

1. Location matters. A bad neighborhood can sabotage everything.

2. Property management isn’t optional. If no one will manage it, ask why.

3. Your team is your backbone. You need the right people to execute your plan and meet your proforma goals.

Without these, even the best deal can turn into a financial disaster.

So, before you jump into your next investment, remember: It’s not just about the numbers—it’s about the foundation you build around them.

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