Lessons from 100 deals I passed on

This is an education note, not a record of current offerings or a claim about future opportunities.

The “100” in the title is a teaching frame for repeated pass patterns, not a claim about 100 current or identifiable deals. The fictional committee and example below are hypothetical teaching devices. No live PRSE opportunity is being described.

Imagine a fictional investment committee reviewing its pass log. The property names are gone. The reasons remain.

One page says the price left no room. Another says the loan matured before the work. A third says the rent comps had taken a two-mile drive into a better neighborhood and hoped nobody checked the map.

“Are we passing for seven different reasons?” someone asks.

“No,” the underwriter says. “We are passing on the same mistake in seven costumes.”

That is when a pass log starts earning its keep.

The reasons keep returning

The repeated problems are ordinary:

• purchase price leaves no room for error;
• debt is too short for the plan;
• rent comps are borrowed from a better location;
• taxes and insurance are treated lightly;
• sponsor experience does not match the business plan;
• reserves are thin;
• exit cap assumptions are too friendly;
• investor rights are weaker than the pitch tone suggests.

Most passes do not end with a scandal. They end with a cell turning red after a number finally meets its source document.

Optimism starts carpooling

The most common flaw is stacked optimism. One aggressive assumption may be supportable. Five aggressive assumptions riding together mean every driver needs a green light.

Rent grows. Expenses stay tame. Debt refinances. Cap rates hold. Construction stays on budget. Exit arrives on time.

Once somebody reads the sentence aloud without the model between them, the deal no longer has one thesis. It has six favors to collect from the future.

The deal that was fine one row at a time

In this teaching example, the projected result looks strong. The rent premium comes from renovated comps two miles away. The loan matures before stabilization. The tax reassessment is missing.

“Which issue kills it?”

Wrong question. The dependency chain kills it. Lower achieved rent slows the plan; the short loan makes delay expensive; the missing tax bill takes cash from the same thin window. No single issue needs to shout when three of them already share a checking account.

Keep the evidence, not the emotion

Passing gets hardest when the sponsor is polished and the story is plausible. Use a written standard before the presentation gives your judgment a crush.

For every pass, record:

• the top reason for the decision;
• the source document or missing evidence that triggered it;
• the assumption that failed the downside case;
• the price or term that would have changed the answer; and
• the date for any later review.

The transferable rule is to track the dependency, not just the objection. If the same business plan needs friendly rent, friendly debt, friendly taxes, and a friendly exit, do not call each issue small. Call the stack what it is—and pass while the decision is still cheap.