In the world of real estate investing abroad there is an illusion that keeps repeating itself:
“If I bought below market price - I've already won.”
This statement sounds logical, even tempting. Who wouldn't want to feel smart when they manage to buy a property for 20% less than the going price?
But the truth is that it is a trap. Because a low purchase price is only the beginning of a story - and usually not the part that determines the ending.
To illustrate, let's tell of two Israeli developers who entered flip deals in different European markets. Both bought cheap. Both renovated. Both dreamed of a quick profit.
But the result? A different world.
Roni - the one who listened to the market
Roni, an Israeli real estate investor, decided to expand his activity abroad. After months of searching, he found an old apartment in Budapest - 20% below market price.
For many, that would have been enough. But for Roni it was clear: the price is only a starting point.
Instead of getting excited about the potential profit on paper, he decided to find out what was really happening in the neighborhood.
He sat for hours in front of transaction data: how many properties had been sold in the last three months, how long it took each apartment to close, and what prices were actually paid.
He spoke with local brokers, asked questions about the volume of transactions and the type of buyers - local or foreign investors.
When he moved on to check the rental market, he discovered a critical piece of data: the area is close to a large university and a major metro station. The meaning? Constant demand for small apartments from students and young couples.
And finally - a check of the municipality's plans. There were no new projects being built in that district. That is, supply is hardly going to grow, while demand exists and is even strengthening.
All the arrows pointed in the same direction: this market is thirsty for properties exactly like the one he found.
Roni did not hesitate. He bought the apartment and renovated it in a focused way: a practical kitchen, a designed bathroom, light colors and a modern atmosphere suited to young people. Not a luxury renovation, but a smart one.
Within only three months - the property was sold. Not only fast, but also at a net profit of more than 30%.
Alon - the one who fell in love with the price
At that very same time, Alon, another Israeli investor, found an apartment on the outskirts of Athens. Here too the price was below market. The difference? For him - it was all he needed.
“If I bought cheap - I've already won,” he convinced himself.
What he didn't know - was that in the neighborhood, three new projects were being built at the time, with many dozens of small apartments at competitive prices.
He also did not check that the local market is heavily based on Airbnb, and just then the authorities began to restrict permits.
The local audience, by the way, preferred new apartments in organized projects, with an elevator, parking and maintenance services - not renovated old apartments.
But Alon did not see it. He invested a large sum in the renovation - impressive design, expensive materials, even an Italian kitchen.
The property went on the market - and then the problems came.
The phones did not ring.
Interested people did show up - asking for aggressive discounts.
The months passed, and the mortgage kept eating into the profit.
In the end he managed to sell - but the profit stood at only 8%-10%. And instead of three quick months, his money was stuck for almost a year.
Two stories, two realities
Roni and Alon started from the same starting point:
- Both bought below market price.
- Both renovated.
- Both wanted a quick flip.
But only one of them thoroughly checked supply and demand.
The result was almost predictable: Roni came out with an excellent deal. Alon came out disappointed.
The lesson for real estate investors abroad
Buying below market price is a wonderful condition, but it does not guarantee success. In the world of international real estate, and especially when it comes to foreign countries, the wisdom is to understand the real dynamics of the market:
- Who is the target audience? Students, young couples, those upgrading their housing, tourists, or foreign investors?
- What is the state of supply? Are there new projects that will add hundreds of apartments and push prices down?
- What is the actual pace of sales? Not what is advertised - but what is truly happening on the ground.
- What are the regulatory trends? Laws regarding Airbnb, new taxation, restrictions on foreign investors - all of these can turn a “cheap” deal into a trap.
Summary
Roni and Alon proved something simple: a low price is only the beginning.
Roni understood that the numbers on paper are only part of the story. He listened to the market, analyzed demand and supply, and adapted the product to the audience.
Alon settled for the low price, discovered too late that buyers were looking for something else, and paid in time, in pressure and in stuck money.
In real estate abroad - a low price is not the end of the game, but only the opening.
The big money comes when you understand who will really want to buy the property from you, and at what price.
The final insight for investors:
Before you get excited about a nice discount on a property abroad - stop and ask: is the market itself truly thirsty for what you are buying?
Because in the end, it is not the price you pay that determines.
But the price someone else is willing to pay you.
Stories are based on real situations, with identifying details changed. Not legal advice.
Translated from the Hebrew original. עברית