They came to me for a meeting, two partners at the start of their road, to whom the real estate world is not foreign (holders of a brokerage license and partners in a brokerage office). They had received recommendations about me from a mutual acquaintance. After the small talk and a rundown of the résumés and CVs of all parties we moved to the practical side, in which they told about the opportunity that came their way to buy land in a European country together with a local partner, an acquaintance of one of the two, and to build with his help an apartment building. They know the country a little, since they visited together at the acquaintance's and spent about a week with him in the country.
I tried to “milk” more details out of them, but it seemed they do not really know the country in terms of mentality, culture, economy, regulation, and rely on that same acquaintance. In business terms it seemed they were versed in the business data and the business plan. I asked them to delve a bit deeper and study the country, and we arranged to fly together to get an impression of the acquaintance and try to close the deal with him.
In order not to prolong the story too much, I will shorten and say that after a not-long negotiation the partnership was established, the plot was purchased and the parties began to act. Changes were made in the plan, changes in the business plan, and they even decided to market some of the apartments in Israel. As they wanted to advance the project, they encountered obstacles and difficulties. The delays in the timetables began to leave their mark, but they insisted on moving forward despite the obstacles.
A month ago they came to me for another meeting. They had received an offer to enter as partners in a plot in another European country, and to set up a villa project on it.
My partner came in to see that everything was all right when he heard my shouting. “Have you gone crazy?” I shouted. “Have you gone off the rails? You haven't finished building the building yet, you are stuck there and in breach toward your buyers, and now you want to start a project in a new country? What do you know about it?”
They tried to explain that their local partner in the new country is a well-known Israeli real estate man.
“So what the hell does he need you for? What do you bring to his table?” I asked. “If he has a deal as good as you describe, why does he need you?”
They tried to explain that he wants to use their real estate knowledge and especially their marketing and sales capabilities to Israelis. When I tried to explain to them that something here stinks, that if his project were so good he would sell to the locals, they replied that “you don't understand”.
“You are again relying on your local partner, without delving in and without studying and getting to know the country properly before you jump into the water,” I warned. “Focus, build up your proficiency, bring successes in one country and then move on to another/new country,” I suggested.
Despite my advice they decided nevertheless to enter the new project, and just these days, with the help of our local partner, after a not-easy negotiation (well, after all both sides are Israelis), we managed to reach an agreement with their new partner.
If there is one lesson I have learned over the years it is that lack of focus = lack of professionalism. As in every area of life, in real estate too a deep understanding of and familiarity with the country and region in which you invest/operate takes time. Learn the trends, the prices, the way the local market behaves, even the laws and regulation that sometimes change from district to district or between municipalities…
If you want to be successful real estate developers do not run and scatter yourselves; choose one country, one region and one type of project. Show a track record and successes and then move on to another country or a new region.
Stories are based on real situations, with identifying details changed. Not legal advice.
Translated from the Hebrew original. עברית