Want to Invest in Real Estate Abroad? Read This First!

Oren, a young, energetic guy, came to his first meeting with me after visiting the office’s website. He told me he had gone to a bachelor party in Bucharest, and under the hotel there was a real-estate agency. He was curious what he could do with the little savings he had put aside since his army service, and the agency owner, who happened to be an Israeli living in Romania for several years, took him around and showed him a few properties in the city. Oren was impressed and decided to use his savings to buy an apartment and rent it out on Airbnb.

I gave him a short overview of Romanian regulation and the purchase procedures, and he hired us on the spot. The apartment was bought within a short time, after we cleared all the usual legal hurdles of buying in Romania, and Oren went to Bucharest for a month to oversee the renovation and furnish the apartment. While he was still in Bucharest, he contacted me to say he had found another apartment he wanted to buy.

“I don’t recommend you buy this apartment,” I told him in our second conversation about it. “It’s in a building with a ‘red dot’, and that’s a problem.” (For those who don’t know, a ‘red dot’ building is an old building classified as dangerous in the event of an earthquake.)

Oren insisted on buying the apartment despite my warnings and my attempts to persuade him.

About six months after he bought the second apartment, he asked for a meeting at my office. When Oren arrived, he told me he had just come back from a holiday in Athens and had found an apartment there that he intended to buy. I leaned back in my chair, took a deep breath to gather my thoughts, and said: “You have quite a few problems with the Bucharest apartment you bought when you didn’t want to listen to me. You don’t know Romania properly yet, and I think there are enough opportunities and options there. Why Greece, and why now?”

“I don’t understand what you want,” he replied. “I don’t want to put all my eggs in one basket.”

“It’s a question of focus. I think that at this stage expanding to another country will make things harder for you, both in running the business and in growing your real-estate activity.”

“I have a management company in Romania. I’ll find a management company in Greece too,” he replied.

“Oren, we’ve known each other less than a year. I understand you’re impulsive, and I understand you want to conquer the world, but take some advice from someone with experience: focus, learn things in depth, make the most of Romania and Bucharest before you expand and start operating in another country. It will only make you stronger and let you earn more,” I tried to persuade him.

None of my attempts to convince Oren to keep his focus on Romania for now and not expand to Greece worked.

It’s true that every investor is different, and each has his own considerations and goals. Even so, I strongly recommend weighing the advantages of focusing on one country, especially in the early stages of investing in international real estate.

And it’s worth stressing that focus doesn’t have to mean only a specific country. You can narrow it down to a particular city, and within it to a particular type of property, such as studio apartments for rent, commercial properties or houses, and build expertise in those niches. Or you can focus on a specific strategy, such as value-add, short-term rentals (Airbnb) or “flipping” (buying, renovating and selling quickly).

As someone who knows international real estate, I can tell you that managing properties in several countries is a complex challenge that takes skill and experience. Keep in mind that expanding to several countries demands a lot of resources: time, money and energy. Spreading yourself thin can hurt your ability to invest in and manage properties efficiently in one country. Focusing on one country saves on travel and accommodation costs, and allows close supervision, quick handling of problems that come up, and more. Not to mention that focusing on one country lets you, as a developer, build a strong local reputation and business relationships with professionals in the field. And as I said, focus lets you get to know the local market in depth, learn the laws and regulations, understand the risks involved in the investment, understand the dynamics of the local market and spot better investment opportunities.

So how do you work? Focused, or do you spread your investments?