A Good Real Estate Deal Can Still Fail Because of Too Much Debt Most investors look at leverage as a way to increase returns. And it can. But leverage doesn't fix a weak deal. It magnifies whatever is already there. When the property performs well, debt can improve equity returns. When NOI falls, expenses rise, or refinancing becomes difficult, that same leverage can quickly eliminate your margin for error. Here are 5 signs I look for when evaluating whether a deal may be overleveraged: • Thin debt-service coverage • Dependence on refinancing or lower future rates • Aggressive loan-to-value ratios • Debt maturing before the business plan stabilizes • Insufficient reserves for vacancies, capex, or unexpected costs None of these automatically make a deal bad. The question is how much flexibility remains when the original assumptions don't go according to plan. Can the property handle a 10% drop in income? Can it survive higher rates for longer? Is there enough equity in the ...