A sunny morning in Ness Ziona, and I am sitting in my office, a steaming mug of coffee in hand, ready for a meeting with Guy. Guy, a young and energetic fellow in his twenties, came to me with a dream - to buy an apartment abroad. But behind the embarrassed smile, I saw the worry in his eyes. He had saved every shekel from his high-tech work, and the thought of investing all his money in an apartment in a foreign country, far from home, weighed on him.
“I want a small apartment in a tourist destination in the Mediterranean basin,” he said with enthusiasm mixed with apprehension, “but I'm not sure it's worth it. What if prices fall? What if I don't find tenants? What if...”
He did not need to continue. I knew these concerns well. We all want to realize our dreams, but the fear of failure can paralyze us. “Let's look at the numbers,” I suggested, and went over to the whiteboard. “Let's see together whether this dream can become reality, in a safe and profitable way. And more important, let's understand what your goal is with this apartment. That will help us choose the right property and fit your strategy.”
Guy nodded in agreement. “The truth is I'm not entirely sure what my goal is,” he admitted. “On the one hand, I want a good return on my investment. On the other hand, I also dream of a refuge I can travel to in the summer. And maybe even move there altogether at some point, if things here keep deteriorating.”
I understood him. Many Israelis today are looking for real estate investments abroad, not only because of the potential yield, but also because of the peace of mind they can provide. It is like an insurance policy for an uncertain future.
“There are many types of investors who buy apartments in the Mediterranean basin,” I explained. “There are yield investors, who look for properties with high rental potential. There are those who want to live in the apartment part of the year and rent it out the rest of the time. There are those who are relocating and need a place to live. And there are also those who see it as an option for an apartment to ‘escape’ to, in case...”
I did not finish the sentence, but Guy understood. The situation in Israel is unstable, and the thought of a safe place abroad reassures many.
Guy told me about the apartment he had found, an income-producing property from an Israeli developer. The price was 120,000 euros, and he planned to put in 40% equity and take a mortgage for the rest. “The developer projects a 7% yield,” Guy said, “but I want to know what my real profit will be. I can't afford to be wrong.”
“Let's calculate it,” I said, and wrote the data on the board. We assumed annual appreciation of 8%, a sale after 4 years in order to enjoy tax benefits, and financing and legal expenses. The numbers began to form a clear picture. Guy would invest 48,000 euros, and at the end of 4 years, after receiving rent, selling the property and paying expenses, his net profit would be about 48,000 euros.
“That means an average annual return of about 25% on your capital,” I explained.
Guy's eyes lit up. The apprehension was replaced by excitement. “That sounds amazing!”
“It's important to remember that you will have to pay tax in Israel on the profit,” I reminded him gently, “but still, this looks like a promising deal, especially in light of the current situation in Israel, with interest rates in the economy constantly rising and many investors looking for investment alternatives abroad. As Yair Lapid recently noted, ‘Israelis are a nation of entrepreneurs and investors. We look for opportunities everywhere in the world.’”
Guy nodded, this time with a real smile on his face. He had received the information he needed, but more than that, he had received the confidence he needed to turn his dream into reality. Investing in real estate abroad is a significant step, but with the right knowledge, planning and accompaniment, it can also be a profitable and satisfying one.
As Warren Buffett once said, “Risk comes from not knowing what you're doing.”
Guy now knew exactly what he was doing, and that was a big step toward realizing his dream.
Stories are based on real situations, with identifying details changed. Not legal advice.
Translated from the Hebrew original. עברית