Oren, a young, energetic man, came to me for a first meeting after visiting the office's website. He told me that he had traveled to a bachelor party in Bucharest, and beneath the hotel there was a real estate agency. He became curious to know what he could do with the few savings he had accumulated since his military service, and the agency's owner, who happened to be an Israeli who had lived in Romania for several years, took him for a tour and showed him a number of properties in the city. Oren was impressed and decided to buy an apartment with his savings and rent it out through Airbnb.
I briefly reviewed the Romanian regulation and the purchase procedures with him, and he immediately retained our services. The apartment was purchased within a short time, after we cleared all the usual legal hurdles of buying in Romania, and Oren traveled to Bucharest for a month to supervise the renovation work and furnish the apartment. While still in Bucharest, he contacted me and updated me that he had found another apartment he was interested in buying.
“I don't recommend that you buy the apartment,” I told him in our second conversation on the subject, “it is in a building with a ‘red dot,’ and that is problematic.” (For those not familiar, a building with a ‘red dot’ is an old building classified as dangerous in the event of an earthquake.)
Oren insisted on buying the apartment despite my warnings and attempts to persuade him.
About half a year after he bought the second apartment, he asked to hold a meeting at my office. When Oren arrived at the office he told me he had just returned from a vacation in Athens and that he had found an apartment there that he intended to buy. I leaned back in my chair, took a deep breath to gather my thoughts, and then said to him: “You have quite a few problems with the apartment in Bucharest, which you bought when you didn't want to listen to me. You don't yet know Romania properly, and I think there are enough opportunities and possibilities there. What do you want with Greece now?”
“I don't understand what you want,” he replied. “I don't want to put all my eggs in one basket.”
“It's a matter of focus. I think that at this stage expanding to another country will make it hard for you, both to run the business and to develop your real estate activity.”
“I have a management company in Romania. I'll find a management company in Greece too,” he replied.
“Oren, we've known each other less than a year. I understand that you're an impulsive guy, and I also understand that you want to devour the world, but take advice from someone with experience - focus, learn things in depth, exhaust the potential of Romania and Bucharest before you expand and start operating in another country. It will only strengthen you and allow you to earn more,” I tried to persuade him.
All my attempts to persuade Oren to keep focusing on Romania at this stage and not expand to Greece did not help.
It is true that every investor is different, and each has his own considerations and goals. At the same time, I strongly recommend considering the advantages of focusing on one country, especially in the early stages of international real estate investment.
And it may be important to emphasize that focus is not necessarily only on a specific country; you can deepen the focus to a certain city and within it to a certain type of property such as studio apartments for rent, commercial properties, or houses with land, and develop know-how in these niches, or focus on a specific strategy, such as value enhancement, short-term rental (Airbnb), or “flipping” (buying, renovating and selling quickly).
As someone familiar with the field of international real estate, I can attest that managing properties in several countries is a complex challenge that requires skill and experience. It is important to take into account that expanding to several countries requires many resources - time, money and energy. Diversification may harm the ability to invest in and manage properties efficiently in one country; focusing on one country allows you to save on travel expenses, lodging, close supervision and quick handling of problems that may arise, and more. Not to mention that focusing on one country allows you, as a developer, to build a strong local reputation and create business ties with professionals in the field. And as noted, focus allows you as a developer to know the local market in depth, learn the laws and regulations, understand the risks involved in the investment, understand the dynamics of the local market and identify better investment opportunities.
So how do you operate? In a focused way, or by spreading your investment?
Stories are based on real situations, with identifying details changed. Not legal advice.
Translated from the Hebrew original. עברית