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If you’re a real estate investor feeling stuck in a deal drought, you might be tempted to stretch the numbers, rationalize red flags, or push a marginal opportunity just to get something under contract. But let’s be clear: forcing a deal to work is a risky move, and one that seasoned investors know to avoid.
In this article, we break down why trying to force a deal rarely pays off-and how to know when to walk away. Whether you’re a new investor or have a few properties under your belt, this advice will keep your portfolio (and your wallet) safe.
Don’t Let the Excitement Cloud Your Judgment
We get it-landing a new deal is exciting. It’s easy to get swept up in the momentum of property walkthroughs, creative financing, and what-ifs. But excitement can lead to emotional decision-making, and real estate investing should be a numbers-first game.
A good deal will work on paper and in practice. If you’re crunching the numbers and barely squeezing out a 10% return on a fix and flip-even before factoring in capital gains, holding costs, or unexpected repairs-that’s your sign to pause.
The 70% Rule Still Stands
For fix and flip investors, the industry standard is to stay at or below 70% of the ARV (after repair value). Here’s a simplified example:
- ARV: $100,000
- Purchase Price: $40,000
- Rehab Cost: $35,000
- Total Investment: $75,000 (75% of ARV)
That’s already pushing the limit. Add 10% for seller fees, holding costs, and potential surprises, and your profit margin starts to vanish. That’s not a deal worth forcing.
Think Like a Lender
Before you fall in love with a property, ask yourself: Would the bank finance this?
If your numbers don’t meet lending standards, chances are it’s not a solid investment. Lenders aren’t trying to be the bad guys-they’re protecting you from a financial misstep. Use their perspective as your filter for green lighting any deal.
Not Every Red Flag Is Worth Ignoring
Red flags in real estate are there for a reason. And while a small issue might be solvable, some should immediately halt your process:
- Appraisal comes in low?
- Contractor bid comes in 20% over your original estimate?
- Foundation issues or major structural concerns?
Any of these can eat your profit and turn your “okay” deal into a financial headache.
Know Your Risk Tolerance-And Stay In Your Lane
One investor’s “stretch” deal might be another’s safe play, depending on experience, capital reserves, and goals. But especially for newer investors, it’s crucial to avoid the temptation to “risk it for the biscuit” on your first or second deal.
If you blow your budget or timeline early on, you may never make it to deals #4, #5, or #10. Play the long game.
Bottom Line: Trust the Numbers, Not the Fever
Real estate investing isn’t Monopoly. It’s real money, real time, and real risk. A little excitement is fine-but if you feel like you’re pushing too hard to justify a deal, you probably are.
Slow down, run the numbers (honestly), get comps from a solid realtor, and lean on your team-your contractor, lender, and mentor. A smart investor knows when to walk away.
Aside from finding you the best financing, our team helps you run the numbers on the deal to make sure you’re hitting your goals. Give us a call today to make sure you’re not getting into a bad deal.