Bucharest, security for investors, and how not to build by remote control

Episode on YouTube ↗

Key points

1. “Opening a new country” takes months: learning the regulation and finding a local partner. An Israeli lawyer is not permitted to advise under foreign law, so the work is done together with a local lawyer.
2. “When in Rome, do as the Romans do”: build for what the local buyer wants, from the apartment mix to the level of finish, not for what is customary in Israel.
3. Someone who gives a loan checks mainly the repayment terms and the security. Someone who comes in as an equity partner checks the business plan, their ability to influence and the exit route.
4. A personal guarantee is worth only what stands behind it. Each form of security is examined on its merits, together with the developer's track record.
5. Investor funds can sit in an escrow account and be released to the developer by milestones, after a supervisor confirms they have been reached.
6. Research and a business plan first, and only then land. If construction costs 850 euros per square meter and the area sells at 600, the plot is not suitable, even if “there are more buyers”.
7. According to him, as of January 2024: a permit under the existing plan in Romania can come through within about six months, and a site-specific plan change takes between six months and a year and a half.
8. Even when a bank offers 75% financing, he recommends planning on 50%, and leaving a cushion that will last about six months without income.
9. “No chance without risk”: an investment can lose money, so you check, diversify and do not invest money you do not have.

“I don't believe in building by remote control”

Episode map

1. 0:46Who Ilan is: almost 20 years in real estate, 15 of them advising developers and investors abroad
2. 3:12“Opening a new country”: law, taxation, planning and a local partner
3. 9:30Why Romania in particular
4. 14:20Two types of investors: the apartment buyer and the project investor
5. 20:43A loan versus an equity investment, and what makes security real
6. 27:00Escrow accounts and releasing funds by milestones
7. 30:10The research done before buying land
8. 33:25Rezoning and building permits in Romania: timelines
9. 38:13Holding costs and taxation in Romania and Israel
10. 41:24Networking, and why you cannot build by remote control
11. 46:09Romania: trends, the 2008 crisis and today
12. 51:01How a private investor protects themselves in an unstable period
13. 54:13What to do with 100,000 euros: careful leverage
14. 58:56What drives him, and a book recommendation

Summary: the site team, based on the recording. These things were said in a recording from January 25, 2024. Since then, laws, tax rates, interest rates and prices may have changed. The summaries were written by us and reflect what was said at the time of recording.

All episodes