v1.37 - When Deals Don’t Perform

Adam and Dustin tackle a topic most investors prefer to avoid: what happens when your real estate investments underperform or lose money entirely.The conversation includes candid insights about different levels of deal performance, from cash flow shortfalls to complete capital losses, along with why position sizing is the most critical risk management tool for passive investors. The discussion also explores the safety nets that can protect your investments during challenging times, including debt structure considerations and cash flow versus appreciation plays.Drawing from real-world examples, including their own Memphis four-plex deal and a recent Chico acquisition, Dustin and Adam explain how to evaluate sponsor experience with adversity and why some successful investors actually prefer working with sponsors who have navigated difficult situations. They also address the unrealistic expectations some investors have about risk-free returns and why accepting calculated risk is essential for building wealth through real estate.This episode provides practical frameworks for analyzing deal safety nets, understanding the role of debt in investment protection, and maintaining proper perspective when investments don’t go according to plan.Episode Release Notes & Resources:Why Your Need for Investment Certainty Is Sabotaging Your Wealth (Passive Perspectives): https://bigspringcap.com/passiveperspectives/certainty-trap-investment-psychologyWatch episode on YouTube: https://www.youtube.com/watch?v=SgjtX-QtBOMSee all Wealth Independence episodes at https://www.wealthindependencepod.comConnect with Dustin:Big Spring CapitalLinkedIn (/in/TheDustinBailey)Twitter/X (@TheDustinBailey)Connect with Adam:Bidwell CapitalLinkedIn (/in/AdamJPenn)This show is for informational purposes only and is not financial, investment, legal, or tax advice, and does not constitute an offer to buy or sell securities. All investments carry risk, and investors should always conduct thorough due diligence and consult with qualified professionals before investing.