Sometimes the Best Deals Are the Ones You Walk Away From

A few years ago, I found myself deep into what seemed like a promising real estate deal — a unique medical building in Palm Coast, Florida. This property seemed to have it all: a prime location, reputable tenants, high cap rates and strong returns for investors. But, as I soon discovered, a deal that looks perfect on paper sometimes doesn’t hold up in reality.

Uncovering Red Flags Through Due Diligence

Despite many positives — including signed leases, a cooperative seller and a recent loan approval from a reputable lender — we uncovered serious concerns through our due diligence. One of our key steps was conducting a surprise, unannounced visit to the property just one week before my scheduled tour. What I found was startling: the “fully occupied” medical building was anything but. Most suites were locked in the middle of the day, and several were missing signage entirely. This was not what you’d expect from an operational medical facility.

This discovery prompted us to dig deeper, and what we uncovered was alarming. There were glaring inconsistencies across the board:

• Fabricated Leases: Many tenant leases were not legitimate, raising questions about occupancy and the seller’s claims.
• Falsified Property Records: Critical property documents had been altered to present a misleading picture to potential buyers.
• Staged Occupancy: We realized the upcoming scheduled tour would likely be staged, featuring fake tenants and furniture. Months later, this same seller made headlines for pulling the same scheme on another property, hiring actors and renting furniture to create a facade of tenant activity.

Discovering this level of fraud wasn’t just shocking — it reinforced how critical it is to question every assumption during due diligence. When something doesn’t add up, it’s your responsibility to dig deeper and ensure you understand the full picture. Walking away from this deal wasn’t easy, but it was the right choice.

Why Due Diligence Is Everyone’s Responsibility

This experience reinforced the importance of rigorous due diligence, a vital practice whether you’re an investor, an entrepreneur or even a student preparing for a future in business. On paper, the property looked perfect — clean leases, solid tenants and a great location. But digging deeper revealed the truth, and it took courage to walk away from what seemed like a fantastic opportunity.

As I now tell my students at Yeshiva University, great decisions aren’t about finding the “perfect” opportunity. They’re about asking the right questions, uncovering the realities others might miss, and having the integrity to step back when something doesn’t align with your values or standards. This principle applies to real estate deals, career decisions, and countless moments in life where diligence and integrity must guide your actions.

Takeaway: Walk Away When Necessary

In business — and in life — there’s wisdom in knowing when to walk away. It’s often better to lose a deal than to accept risks that don’t serve your best interests. A great deal isn’t just about high returns or impressive cap rates; it’s about transparency, integrity and trust. Remember, sometimes the best deals are the ones you walk away from.

Photo Caption: Proper due diligence is key in making smart deals.

Photo Credit: Unsplash