The Learning Investor vs. the Social-Media Investor: Two Parallel Worlds in Real-Estate Investment Abroad

For almost 20 years I’ve been accompanying investors who want to invest abroad, and more than once I’ve written here about the differences between types of investors. Today, too, I want to focus on the difference between learning investors and social-media investors.

There are investors like Dror, who before booking a consultation had done his “homework” on the Athens property market and learned the map of the city, its neighborhoods and suburbs. He took part in several webinars on Greece run by different companies, and even a conference or two on investing in real estate abroad. Dror didn’t cut corners or save money: even before he came to meet me, he got on a plane to “get a feel for the ground”, met agents and did a few property tours. When we met, his questions were focused and relevant: he wanted to understand in depth the checks we would do as part of due diligence, the process for negotiating the agreement, how registration in the Greek land registry works and what it means, what the management company’s obligations to him would be, and more.

Eliav, by contrast, called to book a meeting after seeing posts on Facebook and attending a webinar by one of the companies operating in Bucharest, and wanted to know whether project X was a good project. When I tried to explain that I couldn’t give an opinion, because whether a project is good or less good depends on the purpose of buying the property, he moved on to haggling over our office’s fees, and even told me we had a week, because he had already bought a plane ticket and intended to fly to Bucharest in a week to sign the contract to buy the apartment. When I asked why he needed me, since a week isn’t enough both to carry out due diligence and to negotiate the wording of the agreement, and our recommendation after due diligence might even be not to buy the apartment, his answer was: “Just go over the contract and tell me everything’s fine.”

The gap between these two investors illustrates a broader phenomenon I’ve been noticing over the past decade, especially since the spread of social media and instant access to information of every kind. On the one hand, accessible information lets potential investors discover many opportunities all over the world. On the other hand, that information is sometimes shallow, slanted, and biased toward the interests of whoever is publishing it.

The learning investor: investing in knowledge that leads to a long-term return

Investors like Dror understand that before you invest in a property, you need to invest in knowledge. They know there are no real shortcuts, and that any investor who doesn’t want to feel like the naive tourist paying three times the fare for a taxi from the airport to the city center has to do the groundwork.

Dror, as he went on to tell me at our meeting, downloaded economic reports on the Greek market from several international financial institutions, looked into the property crises Greece had gone through in the past, and analyzed market trends since then. Beyond checking the different neighborhoods of Athens, he cross-checked information from various sources on rental returns. He didn’t settle for local marketers’ promises, but examined official statistics. When a particular neighborhood caught his eye, he checked the municipality’s plans for it: whether there were development plans or, on the contrary, infrastructure problems that could make living there harder.

Dror focused on the essential questions: What is the tax on rental income? Do Greek tenancy laws protect the tenant or the landlord more? Are there special bureaucratic requirements for foreign investors? And of course, the most important question: does his strategy fit the Greek market?

The social-media investor: when the decision comes before the research

Eliav’s case represents a growing phenomenon: investors who rely mainly on information they consume from social media, marketing webinars and WhatsApp groups. Eliav, as I discovered later in our conversation, had already paid a 5,000 euro deposit to the marketing company, even before meeting me. When I asked him why he had chosen Bucharest in particular, his answer was: “Because that’s what everyone’s doing now. I saw on Facebook that lots of Israelis are buying there and the returns are crazy.”

Eliav couldn’t say which areas of Bucharest appealed to him more, hadn’t checked the price differences between neighborhoods, hadn’t looked into the municipality’s infrastructure development plans, and hadn’t examined the legal implications of foreign ownership of a property in Romania. When I told him about alerts I had received from our local office in Romania about expected changes in the taxation of investment apartments bought by foreigners, he looked completely surprised.

Lessons for the real-estate investor abroad

The cases of Dror and Eliav teach us a few important lessons:

1. Don’t fall for the “missing the train” narrative. One of the most common marketing tactics on social media is creating a sense of urgency and fear of missing out: “Property prices in Romania are rising fast”, “Your chance to buy in Athens before it’s too late” and so on. A sophisticated investor knows that investing in real estate isn’t a decision made in a hurry, and that the property market is usually a relatively slow one. A hasty decision can cost many times the price of proper due diligence.

2. Beware of herd syndrome. The fact that “everyone’s doing it” isn’t a good enough reason to invest in a particular market. Markets that have become “hot” among Israeli investors may already be overpriced, or may be exposed to high volatility once the wave of investors fades.

3. Understand the motives of whoever is providing the information. Behind social-media posts and marketing webinars there are usually clear financial interests. Bear in mind that an agency marketing apartments in Budapest will show you the most optimistic figures, and not necessarily the full picture.

4. Carry out comprehensive due diligence. Sadly, I’ve seen too many investors regret a hasty purchase. Comprehensive due diligence covers not only the property itself, but also the local market, the legal situation, taxation, tenancy laws and the economic forecasts for the area.

5. Think about your exit strategy. Investors like Dror ask: “How will I sell the property if I want to exit the investment?” It’s a critical question many investors ignore. The property’s liquidity and how easily it can be sold are an integral part of the investment considerations.

6. Don’t skimp on professional advice. Trying to haggle over professionals’ fees can turn out to be a very expensive saving. A lawyer with experience in the local market can spot risks that even the most experienced investor might miss.

The successful investor never stops learning

In the end, Dror bought an apartment in Athens, but not in the first project he came across. After a thorough check, he spotted an opportunity in an up-and-coming neighborhood that wasn’t “on the map” for most Israeli investors. He rented the apartment out for more modest income than the “promises” he had seen in the ads, but in a stable property, in an area with approved development plans, and with a clear exit strategy.

Eliav? Sadly, his story represents an all-too-common situation. He did buy an apartment in the project recommended to him in the webinar, but a year later he discovered that the company building the project was in financial difficulty and construction was delayed, that apartment prices in the area hadn’t risen as expected, and that if he tried to sell the apartment before construction was finished he would lose part of his investment.

In the world of international real estate, the difference between a successful investor and a disappointed one doesn’t lie only in luck or timing, but in the ability to learn, research, get the right advice and make informed decisions. Investing in property abroad can be an excellent part of a portfolio, but only when it’s backed by knowledge, research and proper professional guidance.