6,800 on three fourplexes I never bought, all dying at the same step
Fourteen months, three properties under contract, none closed. Costs: 1,900 on the first including a sewer scope, 2,400 on the second, 2,500 on the third which included a lender appraisal I ordered early because I was trying to be efficient.
Every one of them died at lease review, and it took me until the third to see the pattern.
My maximum price came from market rent estimates. I used listing sites, I called two managers, I built a number per unit type and I stood by it. Actual signed leases came in 9, 12 and 14 percent below those numbers in the three buildings. Not because the sellers were lying about anything. Sitting tenants had below market rents, some going back years, and two of the buildings had leases with fixed terms running another eight to fourteen months. So I was not buying market rent, I was buying whatever the leases said until they expired, and the price I had already agreed to only worked on market rent.
Each time I found this out after inspection money was spent, because I was sequencing inspection first and document review second. That order was pure habit. The inspection is the thing everyone talks about, so I did the thing everyone talks about.
What I'd do differently: leases, the rent roll, and twelve months of bank deposits inside the first five days, with a document review contingency that lets me leave before I've spent anything on the building itself. Underwrite the in place rents, and treat market rent as an upside I don't pay for. If I had done that on deal one I'd have 6,800 and probably a building.
I don't think the three sellers were unreasonable. I was pricing a future I hadn't verified anyone had agreed to.