Real-Estate Romance: Is a Cheap Investment the Right Move?

I’m sitting in the office looking out the window at the rain, going over my last trip with a client to Athens in my head. He insisted on going to meet the owner of a building he had been negotiating to buy for the past two months, even though it was clear to both of us that we couldn’t get very far because of the price gap between them. On the other end of the phone, which broke my train of thought, was someone who introduced himself as Ofir and explained he had found me after faithfully reading my stories every Saturday in one of the Facebook groups. Ofir asked to come with his wife for a consultation, and explained that he was of Romanian origin and wanted to buy an apartment in Romania, but his wife was worried. We set a time for the meeting, and I went back to my thoughts.

When Ofir and Shir arrived for the meeting, I met a couple in their late 30s, both university graduates, who had saved a little money.

“I’ve been looking for an investment channel for a while, and because my parents immigrated from Romania in the 1970s, I started looking for opportunities there. I found an apartment that costs 45,000 euros. We have 35,000, and I’ll cover the rest with a loan,” he opened, as I watched Shir shrink into her chair.

“What’s bothering you? Why are you against it?” I asked Shir.

“I’m not against buying a property in Israel or abroad in principle, but if we don’t have enough money to buy, I’d rather not take loans to finance this fantasy,” she replied.

“Before we get into an argument,” I cut in on Ofir, who was about to answer her, “I want to understand why you decided to buy this particular apartment,” I asked.

“What do you mean? I have a certain amount of money, and I’m not going to buy an 80 or 120 thousand euro apartment now with the 35 thousand we have,” he replied.

“Great. I have a client who bought a hotel at a ski resort in Montenegro and is selling apartments there for about 30 thousand euros. Why not buy there and avoid taking a loan?” I asked, deliberately, to challenge the couple, and especially Ofir, since my suggestion removed the reason for Shir’s objection: they could buy an apartment without an extra loan.

“You see, I have a connection to Romania. My parents came from Moldavia in Romania in the 1970s,” Ofir replied. “I want a property in Romania. Montenegro, Bulgaria or Hungary interest me less.”

“So we’ll buy a property only in Romania no matter what, even if we find it suits us less,” I pressed.

“I don’t see where you’re going with this,” Ofir burst out.

“There are so many things to consider,” I replied, “before the price. Price isn’t everything. I’d suggest you think about why you want to buy the apartment. What need does it meet for you? After that we can check whether this specific apartment in this specific place meets your needs.”

“I don’t get it,” Ofir tried to insist. “There’s an apartment at a price that suits me, in the country where I want to buy. Why not buy it?”

“Because price isn’t everything,” I repeated, deliberately ignoring the question of the country, and for the first time I saw a smile at the corner of Shir’s mouth.

“What are the costs of buying the apartment? Have you factored in legal fees, the notary, taxes? What about furnishing the apartment? And I haven’t even got to questions about the apartment’s location and how much it can be rented for,” I went on.

Ofir sat in front of me like a scolded schoolboy, and I felt I really couldn’t let him go home like that, so I added: “I’m sure the apartment you found is one you could buy and get both enjoyment and a return from, but I think you both need to be at peace with the move, and if Shir has any concern, it’s worth stopping for a moment to check. I have a document here that I give clients so they can define their goals in buying the property and their needs, so the property can be matched to them better. I suggest you sit down at home and answer the questionnaire, and if you like we’ll have another meeting and see how to move forward.”

Ofir and Shir didn’t come back for another meeting. I’m not even sure they bought the apartment in Romania. A few weeks later I spoke with Ofir, who called to ask about an apartment offered to him by an Israeli marketer, and once again the conversation was about the price and their ability to afford it. I tried to find out whether he knew, or had learned, something about the place or the project he was being offered, but he avoided answering.

Price isn’t everything in a real-estate deal. There are so many parameters worth considering when buying an apartment as an investment (in Israel too, and especially abroad). Start by defining your goals: why do you want to buy an apartment abroad? To live in, as an investment, a flip, passive income or holidays? What’s your budget? How long do you plan to hold the property? What level of risk are you willing to take? Clearly defined goals will help you find the most suitable property.

Next, research the property market in the country, the city and the specific neighborhood that interests you. Understand price levels, taxation, ownership laws and potential returns. Include a physical visit to the property, walk around the neighborhood, find out who lives there, and check purchase and renovation costs (if needed) with local agents.

Don’t rush. Buying an apartment, in Israel or abroad, is a major decision. Don’t let social pressure (“everyone’s buying abroad”) or aggressive marketing influence you. Take the time to research, understand and weigh all the options.