A few months ago I met a young Israeli couple of investors - Neta and Asaf - who came to me after a short visit to Bucharest.
“We found an excellent apartment, a real bargain,” they said. “Everything looks perfect. City center, a developing neighborhood, a ridiculous price. We just want you to take a small legal look, to make sure everything is in order.”
I've heard this sentence hundreds of times: “just to check that everything is in order.”
But with real estate, and especially with deals abroad, there's no such thing as “everything looks perfect.”
There is only one thing that truly matters: what story the numbers tell - and what they hide.
The apartment in question: 65 sq m, third floor, in a ten-year-old building in the Aviatiei neighborhood, one of the most sought-after areas of recent years.
The asking price: 165,000 euros.
According to the marketer, similar tenants there pay around 850 euros a month.
Sounds good, right?
So I decided to take them on a short journey - three different ways of analyzing exactly the same deal.
1. The income approach - looking through the landlord's eyes
The first and most common approach among Israeli investors is the income approach.
It is simple, direct, and speaks to the heart: how much will the apartment yield me in a year?
So let's start with the numbers:
850 euros × 12 months = 10,200 euros a year.
10,200 ÷ 165,000 = 6.1% gross yield.
“Not bad at all,” they smiled.
But then we added the small line most investors forget to read.
- Property management fee: 10% of the rent = 1,020 euros
- Insurance, property tax, ongoing maintenance: about 1,000 euros
- One month of vacancy a year = another 8% less
After a simple calculation the result already dropped to 4.4% net.
And then another factor came in - VAT in Romania, which rose to 21% in August.
Suddenly the fixed expenses grew, some local services became more expensive,
and the net yield plunged to only about 4%.
Conclusion: the deal that “sounded like 6%” turned out to be barely 4%.
Still a legitimate deal, but far from a bargain.
2. The comparison approach - looking through the market's eyes
To understand whether the price is truly attractive, we moved to the comparison approach - a method based on similar transactions sold in the same area recently.
We pulled an official transactions report from Bucharest (Romania keeps a public record of sale transactions, like the Israeli land registry, the Tabu),
and examined three very similar apartments in the neighborhood, the same size, building age, floor and finish level.
- An apartment on Nicolae Caramfil street - sold 3 months ago for 158,000 euros
- An apartment on Avionului street - sold two months ago for 162,000 euros
- An apartment in the same building, one floor up - currently offered at 167,000 euros
On average, the price per sq m in the area is around 2,450-2,550 euros per sq m.
Their apartment? 165,000 euros for 65 sq m = 2,538 euros per sq m.
In other words - the deal is not expensive, but also not cheap.
It sits exactly in the middle of the market.
Which means that the real profit depends not on a bargain, but on managing the property properly over time.
And here comes the significant difference:
An investor who looks only at the ongoing yield may get excited about 6% on paper,
but whoever examines by the comparison approach understands that the potential for appreciation is limited.
Especially in a market where the VAT increase has curbed price growth and caused many buyers to sit on the fence.
3. The cash flow and financing approach - looking through the bank's eyes
The third approach is in my view the most important - the cash flow and financing approach.
This is not an approach of marketers, but of real developers.
Suppose our investors are not buying the apartment in cash, but with leverage:
- Equity: 50,000 euros
- Loan: 115,000 euros for 15 years
- Average interest rate in Romania: 6%
Monthly repayment: about 970 euros.
Rental income: 850 euros.
Monthly cash flow: minus 120 euros.
That may sound small, but it is a cumulative minus of 1,440 euros a year before unexpected expenses, before repairs, and before tax.
And once you add title transfer costs, insurance, bookkeeping and double Israeli-Romanian taxation,
that gap could grow.
And here comes the most important insight in real estate abroad:
Negative cash flow does not fix itself.
If it is not planned in advance as part of the strategy, it becomes a pit that increases the risk.
An investor who understands cash flow doesn't get excited about a “high” yield on paper,
he first asks how much money I actually spend every month, and how much peace of mind I get from this property.
The same apartment - three different stories
When I presented the three approaches on the same apartment, Neta and Asaf looked at each other.
“So how do you know if the deal is actually good?” they asked.
I answered them this way:
“When a deal looks perfect to you under all three approaches, then it is an exceptional deal.
But if it is good under only one approach, that's an amber light.”
Because each approach represents a different type of investor:
- The income approach suits someone seeking stable rent and a fixed return.
- The comparison approach speaks to someone who believes in value enhancement and a growing market.
- The cash flow and financing approach suits experienced investors, who manage debt and yield together.
Only when all three intersect do you truly understand what you are buying.
The bottom line
The Bucharest of 2025 is not the same city as in 2018.
It is more sophisticated, more competitive, and full of investors from all over Europe looking for deals “like the old days.”
But whoever treats it only as an “emerging market” misses the depth.
A smart deal in Bucharest is not one that looks pretty in Excel,
but one that looks consistent under all three methods together.
Neta and Asaf, by the way, did not buy that apartment.
They waited another month, found a newer apartment at 160,000 euros,
sold below market price, with a tenant already signed and a balanced loan-to-cash-flow ratio.
Suddenly the numbers worked under all three approaches,
and the first night after signing was also a quiet one.
If you are examining an investment in Bucharest, Greece, Cyprus or another European market,
don't settle for a pretty Excel sheet.
Check the deal using at least three approaches.
That is the way to protect your capital and to invest truly wisely.
Stories are based on real situations, with identifying details changed. Not legal advice.
Translated from the Hebrew original. עברית