This week I met with a couple who are about to buy a house in a European country. They asked to come for a consultation.
I know the project in which they are about to make the purchase. But the main part of the conversation did not deal at all with the project and the house they are about to buy. When I sat with myself after the meeting I thought how strange it is that people go to buy a house or apartment in a foreign country based only on an ad they saw on one social network or another. Have our consumption and purchasing habits changed so much that we are willing to invest hundreds of thousands of shekels only on the basis of an ad we saw on Facebook, Instagram or TikTok?
The couple who came said that they want to create for themselves an option for living abroad in case of need, and in parallel are thinking of generating a monthly yield from the property they will buy. They saw the online ad for the project in question, got excited, met with the developer, received an offer and decided to make a purchase.
I understood that they had not exactly done any study and research, and I tried to understand a little more how prepared they were for making the purchase and aware of the risks and chances, but as I pressed with questions I understood that their decision is quite impulsive. They did not check other alternatives, other developers, investment in other countries. They relied on the developer's sales/marketing people and did not even check prices of similar properties around the project and/or the rent paid in the area. Zero study, research and preparation. As frustrating as that is as a lawyer and as someone who accompanies investors, I tried to steer them a little, to challenge them with questions and data, but in the end the decision is in their hands, and they very quickly moved on to ask questions about specific clauses they had read in the agreement and did not quite understand their meaning and implications.
Whoever regularly reads this column knows that I preach informed purchasing, especially when it comes to buying real estate abroad. All the more so when it is a first investment abroad, which I think should be far from merely impulsive (and don't get me wrong, the very decision to buy abroad can and perhaps should be impulsive, but from there on everything should be carried out with research and learning).
Many investors are drawn to the high yield potential of the overseas real estate market. However, it is important to remember that buying a property abroad is not free of risks.
Knowledge = power
Before entering the purchase of a real estate property abroad, define for yourselves the purpose of the investment in order to match the right property (buying a property on the beach on one of the Greek islands is not the same as buying an apartment in Bucharest, and the question is whether you are interested in a vacation home/apartment or in a property that will yield a return all year round and is intended for long-term or short-term rental).
It is important to remember that the real estate market in each country is different, and what works in one place may fail in another. It is important to carry out in-depth research on the local market, including price trends, supply and demand, regulations and legal conditions. Today everything can be found at the click of a button or through a simple internet search.
Stories are based on real situations, with identifying details changed. Not legal advice.
Translated from the Hebrew original. עברית