Who isn't familiar with the saying that a good salesman could sell ice to Eskimos? But can a good salesman sell us anything?
Daniel, a young man talented in his field, is working on his doctoral thesis and at the same time runs a cyber security business. Over the years since leaving the army he managed to accumulate a small amount of capital, which he decided to invest in real estate, and so he began searching the web for opportunities. His eye was caught by a post from a marketing company that escorts investors in investments abroad, which claimed to know how to build for him, with relatively small equity, a portfolio of properties that would yield a return.
Daniel met with the company's representative, who presented him with a number of opportunities in several different countries, laid out before him the investment opportunities and the future return, and even prepared with him a plan for how he would leverage the investment in the first apartment he would buy in order to buy additional apartments. Daniel was charmed by her, signed an escort agreement, and within about two weeks found himself abroad with the representative, examining projects and apartments for investment.
“She had command of the details, gave data that seemed reasonable and logical,” he told me at our meeting, “built trust with me, and so I moved forward in the process.”
“So what went wrong?” I asked.
“Let's start with the fact that the first apartment I bought with her was rented for a much lower price than she promised, and the ongoing expenses are also much higher than was discussed at the outset,” he replied. “In the second apartment (in another city and another country), the suppliers she connected me with have still not finished furnishing the apartment, and it has already been 6 months since I received the key. And every time I call her she shrugs it off and makes excuses.”
We took all the documents from him for review, along with contact details, and arranged to meet again after a week.
Our conclusions were surprising. In the first country, the marketer/escort had set up for Daniel a local company, which purchased the apartment. Setting up the company entailed company management expenses and also different taxation from what he would have paid as a private individual. This increased Daniel's expenses.
I won't go into the location considerations here, but from our familiarity with the city where the apartment was bought, there is little connection between the rent promised to Daniel and reality, mainly because of the large supply of rental apartments in that specific area of the city.
The apartment in the second country was not furnished or occupied because the management company the marketer/escort had contracted with on Daniel's behalf claimed it had not received payment for the furniture promised to Daniel, and it had not begun work at all. The local partner also claimed that the price at which Daniel bought the apartment was significantly higher than the market price in the area.
At the second meeting Daniel sat opposite me helpless.
I explained to him that buying an apartment abroad is different from buying an apartment in Israel, and that above all he is required to carry out serious research to get to know the country, the city and the neighborhood in which he is about to invest, and to match the apartment he buys to his goals.
I explained to Daniel that an investor marketer/escort who is not focused on one country/city may sometimes generate unnecessary expenses, as in his case, because depth of focus and deep, thorough familiarity with the market, the regulation and more are important. Just as I work in real estate abroad (in certain countries) and would not handle a claim for compensation for a road accident or a work accident for you, I explained. Or as you would not go to a dentist and ask him to treat your migraines. Selling isn't everything. Before and after the sale there are many considerations to take into account and many issues that require in-depth knowledge, and someone who tries to sell in Greece and Spain and Portugal alike, presumably does not know any of the markets in depth, and certainly cannot give you guidance that anticipates and/or resolves in advance all the problems you may encounter in a real estate deal.
Stories are based on real situations, with identifying details changed. Not legal advice.
Translated from the Hebrew original. עברית