by LaQuan Henley
Real Estate Broker
January 29, 2026
Most real estate deals don’t fail where investors expect them to. They don’t collapse in the spreadsheet. They erode slowly, after the assumptions have already been approved and the capital committed. By the time underperformance is visible, the damage has usually been done somewhere else.
Think of ROI like a ship. The spreadsheet measures the hull above the waterline—purchase price, rent growth, exit cap, debt terms. Those numbers matter, but they’re not where most deals take on water. The real leaks are below the surface, in places that are harder to model and easier to dismiss.
Execution risk is the first. It’s the gap between a plan and the people tasked with carrying it out. Renovation timelines slip. Leasing underperforms projections. Asset management becomes reactive instead of intentional. None of this shows up as a single catastrophic event. It appears as drift—missed milestones, higher carrying costs, and decisions made under pressure instead of design. Investors often attribute these outcomes to “bad luck,” when they’re usually the result of overestimating operational control.
Timing risk follows closely behind. Markets don’t move in straight lines, and deals don’t exist in a vacuum. A sound acquisition can still suffer if capital is deployed at the wrong moment in the cycle, or if a hold period collides with refinancing constraints, regulatory shifts, or liquidity needs. Timing risk isn’t about predicting the market; it’s about understanding exposure. When flexibility is thin, timing becomes unforgiving.
Then there’s people risk—the most underestimated and least discussed variable. Partners change incentives. Operators burn out. Communication breaks down. Alignment that felt solid at closing quietly erodes over time. These issues rarely show up in investor decks, but they shape outcomes more than most assumptions. A mediocre deal with strong alignment often outperforms a great deal held together by fragile relationships.
What makes these risks dangerous is that they compound. Small execution delays amplify timing pressure. Timing pressure strains relationships. Strained relationships lead to poor decisions. By the time numbers reflect the problem, the underlying causes are already embedded.
Experienced investors learn to read for these risks early. They ask fewer questions about upside and more about downside protection. They evaluate who controls decisions when conditions change. They look for operators who’ve navigated friction before, not just growth. The goal isn’t to eliminate risk—that’s impossible. It’s to understand which risks you’re actually underwriting.
Spreadsheets are necessary. They’re just incomplete. Real returns are shaped by what happens after the ink dries, when assumptions meet reality. The investors who last aren’t the ones with the most aggressive models. They’re the ones who understand where deals really fail—and design around those leaks before leaving the dock.
