The Mediterranean sun gently caressed the offices in Ness Ziona. I had just finished a call about a tangled deal in Romania when a phone call jumped at me, and on the other end - Rami. Rami, a real estate investor with turbo-charged energy but little experience outside Israel's borders, was one of the clients I accompany step by step.
“Ilan, I booked a flight to Athens! I found an amazing apartment for a flip, in the city center, near the Acropolis! I have to close it fast before it gets snatched from me,” he wrote me with contagious enthusiasm.
I smiled. This was not the first time I had encountered this euphoria. I already know that behind every such “golden opportunity,” quite a few small - and large - demons are hiding, unique to international real estate investments. “Rami, let's talk before you jump into the deep water,” I replied. “Remember our mantra: meticulous planning and due diligence are the key, especially when it's a market you don't know in depth.”
Everything looks rosy, until you scratch the walls
The following week was devoted to comprehensive due diligence. We went over everything - legal and financial aspects, and yes, also a careful peek at the property's physical condition. The initial picture was optimistic: legally, everything seemed in order. Financially, the purchase price was attractive, and the renovation forecast seemed reasonable. But then came the physical inspection.
“Rami,” I explained to him at a meeting in the office, “the local inspector's report points to a serious damp problem beneath the flooring, and plumbing work that must be thoroughly upgraded. It will cost you more than you planned for the renovation, and will significantly affect the flip timetable.”
Rami was disappointed, but I calmed him down. “That's exactly why we do this check,” I said. “It's better to discover this now, before the purchase, than after. We have two options: either try to get the seller to lower the price, or look for another property.”
After quick negotiations, the seller agreed to reduce the price significantly. Rami, with the gleam in his eyes again, went ahead with the deal. Together with a local female lawyer, we drafted the contracts carefully, taking into account the nuances of Greek law, and made sure Rami's rights were fully protected.
A quick jump into the water, or a long swim to a safe harbor?
Rami, determined to carry out a quick flip that would yield an enormous profit, invested in a comprehensive renovation. The apartment indeed looked like a million dollars. “Ilan, look how beautiful! I estimate we can sell it at a 30% profit within two to three months,” he told me optimistically.
I, for my part, presented a more realistic approach. “Rami, the market in Greece is indeed growing, but it is not like the fast market in the USA. A flip requires precise timing and a deep understanding of the local market. In my experience, the price you're asking may be a bit high for the current market state, especially for a renovated apartment intended for quick sale. We'd better be prepared also for the possibility of renting it out.”
And indeed, two months passed, then three, and the apartment did not sell at the price Rami hoped for. There were offers, but significantly below the target. “Ilan, what do we do? I'm starting to get stressed,” Rami told me in a phone call, “money is stuck, and no serious buyer in sight.”
“Rami, as we discussed,” I replied calmly, “we have a plan B. I prepared in advance a standard lease agreement that complies with Greek law, and in parallel, we held talks with local property management companies. Let's rent the apartment out long-term. It will bring you monthly cash flow, cover the expenses, and in the meantime we'll wait for the market to heat up. An income-producing property is always a property worth more in the long run.”
Patience pays off: Rami's Greek lesson
Rami, on my recommendation, decided to rent out the apartment. Within two weeks a long-term tenant was found. We helped finalize the lease agreement and verify all the legal and financial details. Over the following two years, the apartment generated ongoing income. Rami, for his part, learned the Greek market in depth, and understood the fundamental differences between flip deals and long-term investments.
After two years, when the market in Greece began to recover significantly and real estate prices soared, I suggested that Rami try to sell again. “The market has changed, Rami. Now is the time,” I said. Rami agreed. The apartment sold within two months, at a price 20% higher than the price Rami had hoped for two years earlier - a much more significant profit than he had expected from the original flip.
“Ilan, thank you,” Rami said with relief in a wrap-up call. “Without you, I would probably have sold the apartment at an enormous loss because of the pressure. Your understanding of both the legal side and the business-entrepreneurial side, and the patience to accompany me throughout the process, were worth every shekel. I learned an important lesson: in international investments, especially when you don't know the market, you must have a partner who understands the whole picture, and not only the clauses in the contract.”
Because in the world of international real estate, sometimes the long road is actually the shortest road to profit.
What would you have done in such a situation? Are you ready to surprise yourselves with a plan B?
Stories are based on real situations, with identifying details changed. Not legal advice.
Translated from the Hebrew original. עברית