Why I don't invest in Bulgaria, Croatia, Florida, Cyprus, Romania or anywhere else
Brett Alegre-WoodChairman, YPC Group
Hey Guys,
On an average day I receive between 2 and 5 calls and emails from various property people who want to sell me something in any of the non-UK property markets. Sometimes I actually give them the time of day and find out what they are offering but most of the time the deal reeks of salesmanship. In other words made-up claims about how wonderful this particular deal is, backed up by hearsay and their brother's best mate who lives out there or my all time favourite -- a lawyer who has left law to do property which means they'll be honest.
When buying in another country, most people never do much more research than what is given to them from the investment company. This is a dangerous habit. Remember: everyone between you and the property is just a salesperson, and they all get paid on making sales.
So why don't I invest my hard earned cash into Romania, Croatia, Bulgaria, Poland, etc etc (too many to name now). In fact I don't even invest in Australia (my home country).
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Now it has nothing to do with making money, indeed you may well make money although I would still question this.
I am a fundamentals investor and this means that unless I have good solid, proven fundamentals in an area I am simply not interested no matter how great the deal looks.
Fundamentals do not include:
potential memberships to the EU,
a new highway might be going in here,
the extra runway has been promised,
there is a 5 star resort planned for down the road,
the beach is great in summer and the snow is only an hour away for the winter,
the Mayor's brother just bought up all the land beside your plot and he is building the new Disneyland
You may not have heard all these before, and true the Disneyland comment was actually a theme park of a name I did not know but someone actually tried to sell me land based on this. They also had a 100 page prospectus about how great it would be including projected income and capital growth once it was approved. My guess is that is was never approved.
So many times I see people swayed by this stupidity. As a salesman myself I know how easy it is to grab a story like that and let it run wild just to sell a development. Good solid fundamentals are things like I have previous discussed in my Why buy in Spain? In this article you won't find any hearsay, no potential, just good solid fundamentals.
I never worry about how much a property is valued at costing me because that is irrelevant. The most important thing about property in your initial capital input followed closely by the 2 year cashflow amount. Everything else is irrelevant in the wider scheme of things. As long as you do these two things and be realistic with them you will not lose in property and in fact you will do very well.
Now my second reason for not investing is more important than the above. I am a focused investor. I focus my attention on specific areas and get to know everything about the area. So for my portfolio it's major towns in the UK and Costa Calida in Spain. I probably don't have to go much further as if you've read anything from this website or been on a trip with me to Spain you will see how much I know about the areas in which I invest. Basically it is all about knowing a lot about a little area. Creating a micro-market and making as much money out of that.
I always say that I would be happy to invest in an area as long as I am 'on-the-ground and local'. This simply means that I know from personal experience about the specific area I am investing in. The only exception to this rule is if I know someone that is competent and local. Someone that I trust and that is actually involved in the local market.
This is the service I offer to my clients in Spain, I spend up to 8 days a month there and last year I spent a total of 14% of the year (or 53 days) in Spain. I know the local bars, clubs, restaurants, I even know how to avoid the traffic and take the scenic routes. I can tell you the local supermarkets, golf courses, beaches, I can even tell you where to get a good traditional Spanish meal.
It's this level of certainty that I have with my investments and this is one of the reasons that I make money. I don't rely on what some salesperson says who has a glossy brochure and a excel spreadsheet. So consider this next time you think about buying in an area you don't know and where you don't know anyone.
I am at heart a salesperson and one of the skills I have acquired over the years is to make anything look good enough to buy. I joke sometimes that I can make Spain, France, Cyprus or Chernobyl look equally as appealing. No disrespect to Chernobyl intended.
Live with passion,
Brett Wood
PS. Please don't read this and think that I am saying that you should only invest in Spain or UK. I am not. Only that, at this time, I personally do not invest in anywhere but Spain and UK.
PPS. I am happy to talk you through a deal in any country you just need to give me a call on 0207 812 1255.
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