The Apartment I Loved, Not the Apartment the Market Loves

In three deals, in three different countries, exactly the same mistake repeated itself.

Yoav first came to me about four years ago. A brand-new investor, with no experience in real estate abroad, a good salary and a strong desire to start "working for himself" through property as well. He came to me after he had already chosen an apartment in Bucharest. Not after market research. Not after checking returns by area. He chose it because he flew there, saw it in a developer's sales listing, and "fell in love."

That was the word he used. I fell in love.

I supported him through the deal, everything was in order legally, and when the apartment was handed over he turned to an Israeli interior designer a friend had recommended. He wanted it to look "like his home in Tel Aviv": an open Scandinavian-style kitchen, light wood flooring, designer lighting. Beautiful. Expensive. And not at all what the local market looks for in a rental apartment in Bucharest, where tenants, students, business people, couples and young families alike, mostly want a simply furnished, functional apartment, without an expensive design story.

Two years later, Yoav came back to me. This time with an apartment in Greece.

Same pattern again: a visit, falling in love, a relatively quick purchase, and then, design. This time a small villa in the Peloponnese, done up in a boho-chic style he had seen on Pinterest. Gorgeous. And suited, in terms of the local rental audience, to a tourist who comes for two weeks in summer, not to the annual rental market he had actually invested in.

The third time, in Cyprus, I already knew to ask him: "Yoav, who are you renting this to?" He answered honestly: "Let's see what comes of it."

What came of it, in the end, was that all three apartments were rented. That's the important part to say: they didn't stand empty, he didn't lose his capital. But in two of the three, the actual return was significantly lower than what he had planned in his head when he fell in love with them. Not because the numbers presented to him were false, but because the numbers always assume the apartment will suit the relevant tenant. And an apartment designed for the buyer's taste, rather than the potential tenant's, will usually rent for less, for a shorter period, or to a narrower audience.

I think about this a lot, because it isn't a mistake of ignorance. Yoav is a smart man; he read, asked, checked documents. His mistake was somewhere else entirely: he made the purchase decision with his heart, and then went on making all the decisions after it with his heart too. Designing the apartment isn't a technical step that comes after the investment. It's part of the investment itself.

I've seen this many times with Israeli investors in particular: the visit to the property becomes an emotional experience, almost like choosing a home for themselves. And that's exactly the problem. An apartment you buy to live in, you design to your own taste. An apartment you buy to rent out, you design to the taste of whoever will rent it. Two completely different kinds of decisions, and usually no one stops the investor and tells him so in time.