International Real Estate Investment Edition: Total Loss of Almost $ 60K
I’ve been known among my friends for having an unusual and unique taste in travel. While I do enjoy the beauty of mainstream destinations like Spain, Italy, France, Thailand, and the USA, I also have a strong curiosity and urge to explore lesser-known destinations such as Georgia, Armenia, Azerbaijan, Peru, and Bolivia.
This preference has also influenced my real estate investments. I find myself drawn to less popular international markets where competition is not too fierce, the market is relatively unknown or unsaturated, property prices are affordable, and rental and tax regulations are loose.
Out of all the types of investments I have been involved in—stocks, cryptocurrencies, real estate, and startups/small businesses—real estate investment is what I enjoy the most at this moment. With stocks and crypto, I can do everything from behind my computer without any human interaction—all decisions are mine. The process is straightforward and, frankly, a bit boring. It should be that way, though! Long-term investment in these asset classes involves a lot of reading and researching, followed by a simple buy-and-hold strategy.
Investing in startups and small businesses, on the other hand, demands my full and active attention and interactions. It’s very dynamic and highly risky, with the success rate largely dependent not on me, but on the company’s CEO, founders, and their team. Statistics show that angel investors face a 50-70% chance of losing some or all of their capital, and they often have to invest in many startups to see just one successful company in the end. I’ll share more about my experiences with this in my next blog.
The truth is—I immensely enjoy my life as it is right now! I have plenty of time for my personal interests, physical and mental fitness, and intellectual curiosity. Investing in more startups or small businesses would consume a lot of my extra free time, and it’s a bit too risky and dynamic for my liking at the moment. Unless I come across an exceptional team and business, it’s a firm no from me.
Real estate brings me the most joy with its perfect combination of time, challenges, risk, and dynamic human interaction. It requires more engagement than simply doing research behind a PC, like with stocks and cryptocurrencies. Of course, all my preliminary research is done online as well, but finding something promising online is just the beginning. I still need to visit the location to get a real-life feel for it. Many times, I feel totally disconnected or disappointed upon entering the country as the realities are quite different from the mere Internet search.
And unlike investing in startups and small businesses, the success of my real estate investments largely depends on me. It allows me to use my own judgment and challenges my curiosity, creativity, and analytical mind to discover hidden gems at my own pace, time, and budget.
Please note that I didn’t arrive at this list overnight. It’s the result of extensive reading, watching numerous investment materials, and learning from my own journey filled with errors and mistakes.
My Criteria for Investing in International Real Estate:
- Ease of Access: With my Dutch passport, I must be able to enter and exit the country easily, without any hassle.
- Respect for Women: The country should treat women well and respect women in business.
- Prime Locations: I invest only in the capital city or the largest city of the country, where the majority of the population is concentrated and where most important businesses are located. This ensures a constant demand for rentals and easier liquidity when it’s time to sell.
- Top Districts: I often focus on the top three districts in those cities. If I cannot afford them, I then look into emerging and potential areas that have already shown some signs of success. The reason is simple—I don’t live there, so my updates on the development can be delayed and inaccurate. Therefore, I often prefer something slightly more expensive with less capital gains but safer and more reliable.
- Convenient Locations: The property should be within walking distance or a very short drive to supermarkets, cafes, restaurants, gyms, pharmacies, and other convenience shops that support daily life.
- Affordability: Ideally, the property should cost under $100K (excluding renovation, legal fees, taxes, and transfer costs). If it exceeds this amount, it must have exceptional features to justify the investment.
- Rental Yield: The rental yield should be above 7% per year. Exceptions are made if the capital gain potential is exceptionally high.
Why I Don’t Invest in The Netherlands—A Country of My Residence?
As a retail and small investor, I currently avoid investing in The Netherlands for several reasons:
- Housing Crisis: Major cities like Amsterdam, Utrecht, Rotterdam, and The Hague are experiencing a severe housing crisis. Property prices have been escalating, and there are limited investment opportunities available.
- Stringent Regulations: Recent government policies have increasingly focused on promoting homeownership over investment. In addition to the existing rule that limits short-term rentals to a maximum of 30 days per year, new regulations have been introduced:
- Higher Taxes: Increased taxes on rental income make investment less appealing.
- Tougher Rental Requirements: New rules for qualifying as a free sector for long-term rentals mean that 90% of apartments in Amsterdam now fail to meet these standards. If a property doesn’t qualify, it can still be rented, but only at government-set prices, which are often too low to cover the mortgage.
- Affordability Issues: With a budget of $100K, it’s virtually impossible to purchase any property in The Netherlands.
While some investors might still find profitable opportunities in the Dutch market, the combination of stringent regulations, high prices, and limited returns makes it an unattractive option for me as a small and new investor.
Why Do I Invest in International Real Estate?
Two significant events provided me with a powerful wake-up call about the need for diversification in investment.
1. The Covid-19 Pandemic: The global pandemic, spanning from 2019 to 2022, turned lives upside down and exposed the fragility of relying on a single income source or industry. Those without savings or with income tied to unstable sectors faced extreme challenges. This crisis underscored the necessity of diversifying investments to manage risk and secure financial stability.
2. A Business Trip to Kyiv: In early March 2020, during my business trip to Kyiv, Ukraine, I met a Hungarian real estate investor who had invested 90% of his portfolio—including his clients’ investments—in Ukraine. He touted it as “a very lucrative market with insanely high returns,” emphasizing its unparalleled potential.
I have also met other successful businesspeople from various sectors who own large operations in Ukraine. They all mentioned that Ukraine is an excellent country for business—it’s easy to attract skilled and hardworking people, and the costs of salaries and running operations are quite low. I visited my client’s massive office at that time, and I was quite impressed.
Toward the end of 2021, a client and friend I had worked with for years shared her plan to open a massive, fairytale high-end wedding venue in either Lviv or Odessa (I can’t recall the exact city) and invited me to join her. Unlike in the West, where extravagant weddings are becoming rare, in Ukraine, they remain essential. Given her deep local connections and entrepreneurial prowess, I was confident in the venture’s success. This opportunity piqued my interest further in investing in Ukraine.
However, just a few months later, in February 2022, Russia launched a full-scale invasion of Ukraine, sending shockwaves around the world. As someone whose parents endured the ravages of war in Vietnam, I felt a deep empathy for the Ukrainian people.
These two pivotal events—the COVID-19 pandemic and the invasion of Ukraine—occurred almost sequentially, highlighting the crucial importance of diversification in all areas of life, particularly financial investments. Had my sole income relied on the hotel, restaurant, or tourism industries during the pandemic, I would have faced an extremely challenging and stressful period. Similarly, if I had invested heavily in Ukraine, as some of my clients and acquaintances did, or committed to the wedding venue project with my friend, my assets might have been at serious risk. This underscores the necessity of diversifying investments and income streams across various sectors and locations. It’s not about giving in to fear but about being better prepared for unforeseen events. While I can’t anticipate every potential crisis, diversifying my investments certainly helps mitigate risks and provides a crucial layer of security.
Interestingly, I recently listened to a podcast featuring Scott Galloway, where he shared his investment journey. Early in his career, Galloway repeatedly lost everything by failing to diversify and putting all his eggs in one basket. This lack of diversification not only led to financial ruin but also plunged him into millions of dollars in debt. While my situation hasn’t been as extreme, I’ve faced significant financial losses myself—$100K from stocks and cryptocurrencies due to similar mistakes. Since then, I’ve made it a priority to avoid these errors and ensure diversification across all my investments, especially in real estate.
The goal of here is simple: to secure my wealth, combat inflation, and generate a stable income. This strategy ensures that I never have to worry about money or return to full-time work against my will. With the peace of mind and free time that this financial security provides, I can focus on creating content for my blog and perhaps writing one or two more books, making my small contribution toward positive change in the world.
To achieve that level of financial security, the path won’t be fast, easy, or smooth. However, one thing I know for sure is that, given the current global tensions, divisions, and conflicts, I need to diversify and spread my investments as broadly as possible across various locations and jurisdictions.
Biggest Mistakes I’ve Made So Far with International Real Estate Investment:
You might wonder—given my knowledge and experience, how could I possibly make significant mistakes? The truth is, like any skill, real estate investing comes with its own set of unique challenges—many of which aren’t covered in textbooks. Mistakes are an inevitable part of the learning process, and I don’t mind them at all. Of course, it would be great if I could avoid them altogether, but let’s be realistic—perfection is a bit of a fantasy, right? What’s most important is that I learn from these mistakes without getting discouraged or being too hard on myself.
Number #1 Mistake: Trusting Too Easily and Overlooking Cultural Differences
One major mistake I made was trusting people too easily and overlooking cultural differences. Since moving to the Netherlands, I’ve been immersed in diverse environments and interacted with people from various cultures. This, along with my extensive travel and work experience, gave me confidence in my ability to communicate and work effectively with almost anyone. I also became accustomed to the Dutch communication style—transparent and direct, where if something is said, it is meant. There’s no beating around the bush. A deadline is a deadline, and a legally binding contract carries significant weight.
When I ventured into international real estate, my first destination was Georgia—a small European country. While not as renowned as Rome, Paris, Amsterdam, or London, Tbilisi, the capital of Georgia, has been gaining popularity among Western tourists. Although I anticipated encountering some unique business practices and landscapes, I assumed that Georgia would share many similarities with other parts of Europe, albeit not as starkly different as those between Europe and regions like Asia, Africa, or South America.
During my travels in Georgia, I was struck by the extreme hospitality and friendliness. I was so in love with the country and the people that I even considered making it a base to live in for 3-6 months each year. As an inexperienced and first-time international investor, I was swept away by these overwhelmingly positive experiences, which led me to let down my guard—a decision that would later prove to be costly.
One of the real estate agents I encountered truly impressed me with her helpfulness, patience, and professionalism. Having observed her work and interacted with her over several days at different events, I decided to hire her and her team to renovate my apartments after the purchase. I paid her $39,500 upfront for materials, appliances, and labor. She explained that, as a small boutique construction business, she needed advance payments to manage cash flow. With three other ongoing projects with unpaid balances, I had two options: either wait until those projects were completed before starting mine or pay upfront so she could immediately order materials and begin the renovation. Considering my project was supposed to take 3-4 months, I accepted the arrangement. Despite her warm and seemingly honest demeanor, which I later discovered was misleading, I trusted her.
After completing only 20% of the work, she stopped showing up and failed to pay her workers, who then refused to continue. My local project supervisor struggled for months to get any meaningful response from her. After over a year of delays and excuses, I decided to sue her in a Georgian court. Despite having solid evidence and expert reports, the case has dragged on for over two years, costing me more than $15K in legal fees alone, with the final outcome still uncertain.
Throughout this process, I encountered further issues with two other lawyers and many more dishonest businesspeople. As a non-local, I was treated differently, unfairly, and often charged higher rates. Although I’m accustomed to such challenges from my travels and background in Vietnam, I was shocked at the severity of these issues in Georgia.
In total, this first international real estate investment cost me nearly $60K: $39.5K for renovation, $15K for legal fees, and $5K in travel expenses, not to mention missed rental income, stress, and wasted time.
The good news isthat I eventually hired a different company to complete the renovation, and the apartments turned out beautifully. They now perform well on Airbnb.
Will I invest in Georgia again? Probably not, unless an exceptional opportunity arises. The reasons are threefold: first, the country’s proximity to ongoing conflicts, including the Russia-Ukraine war and regional tensions with Armenia and Azerbaijan, presents too much risk. Second, Georgia’s small population of 3.7 million and declining birth rates make it less attractive for further investment. Third, I need to diversify my portfolio, and I believe that having two properties in Georgia is sufficient.
Number #2 Mistake: Making a Hasty Investment Decision
This is considered my biggest and most reckless investment mistake I’ve ever made to date. I even feel ashamed and stupid as I write this blog detailing my journey.
I Bought a Condo Without Ever Visiting the Country or Seeing the Project in Person 🤦♀️😵💫
To provide some context, I had been researching this region and country extensively. I was familiar with their GDP, birth rates, property purchase rules for foreign investors, rental income taxes, and more specific details like the best districts, average prices per square meter, and top developers.
When a new project from a reputable developer was announced, it ticked all my boxes: priced under $100K, located in the prime district of the capital, and featuring a high-end, luxurious building with amenities such as gyms, meeting rooms, pharmacies, and supermarkets. It was also within walking distance of tourist attractions, major supermarkets, hospitals, and nightlife.
The project was scheduled for completion in 2027, which I thought would give me ample time to visit and possibly make a purchase later. However, within weeks of the launch, only five units remained out of the three hundred—three were beyond my budget, and two were within it. I engaged an agency to negotiate on my behalf and requested that they hold one of the units for 3-4 weeks until I could visit, as personal circumstances prevented me from traveling immediately. I even offered a $2K deposit to demonstrate my serious interest, but the developer declined, operating on a strict first-come, first-served basis.
A week later, the agency informed me that the two smaller units had been sold. Although disappointed, I reassured myself that what’s meant for me won’t pass me by. Then, two weeks later, the agency reported that a buyer had exchanged a smaller unit for a larger one, making the unit I was interested in the last available one. Given the global material shortages and rising prices, I reasoned that investing $100K now would be preferable to letting it lose value in the bank. Additionally, I figured the worst-case scenario would be breaking even, so I decided to seize the opportunity and paid a 20% down payment.
All the paperwork was managed through my agency and the convenience of registered post, without me ever visiting the country or the project location. One reassuring factor is that the project is legitimate, and construction has commenced. However, whether it will meet my expectations and turn out as successful as I had hoped remains to be seen. While I don’t anticipate it being a total failure, I regret not taking the time to visit the country and experience it firsthand, as I normally do with investments. I might have acted too quickly, locking myself into a deal without thoroughly vetting it from multiple angles. In hindsight, there could have been better opportunities available, and my impulsiveness may have compromised my judgment.
Stay tuned for updates as I track the progress of this investment until its completion in 2027. In the meantime, pray for me 😀🙏🤞!
Other Key Pitfalls to Avoid in International Real Estate Investment
Throughout my international real estate investment journey, I’ve come across several pitfalls that beginner investors often overlook or consider trivial. Ignoring these can lead to costly mistakes—perhaps not as dramatic as mine, but close! 😂
- Investing in Holiday Homes in Emerging Resorts: Be cautious when considering a holiday house or apartment in an up-and-coming summer or ski resort, especially in developing countries like Albania, Bulgaria, Georgia, Vietnam, or Cambodia. As a place gains popularity, it often leads to a surge in new developments—skyscrapers and resorts built rapidly and sometimes haphazardly. Governments, eager for revenue, may permit unchecked construction, resulting in oversupply. This can lead to lower occupancy rates and diminished rental income, especially if the area’s appeal diminishes over time due to loss of authenticity or increased competition. The rapid expansion can quickly reduce property values and liquidity.
- Always Engage a Local Agent: Invest in a local agent to assist with legal contracts, purchase agreements, renovations, and property evaluations. Skipping or cutting corners on this can lead to significant headaches and additional costs later. Even if you are familiar with the country from previous visits, doing business and making investments requires a deep understanding of local rules, regulations, and business practices. A local agent offers invaluable insight and expertise that friends, no matter how knowledgeable, may not provide. They can offer objective advice, assist with negotiations, and help ensure your investment aligns with your financial goals and budget.
- Be Aware of Conflicting Agendas: Remember that everyone involved in a property transaction has their own agenda. Sellers want to close deals, brokers are focused on earning commissions, and each party may have biases or interests. To counter this, diligently verify information from multiple sources and cross-check reliable references. The more comprehensive your research on the area you’re considering, the better you’ll understand the market. This thorough approach helps you make well-informed decisions with minimized risk.
** This chapter is part of a 4-chapter series— don’t miss any part of the story! Stay updated and read more chapters from this series here:
- Part 1: Introduction—Investment Mistakes To Avoid: My Nearly $1 Million Loss And Lessons Learned
- Part 2: Stocks & Crypto Investment Edition: My Journey of Losing $100K
- Part 3: International Real Estatement Investment Edition: My Most Reckless Mistakes, costing me $60K and more
- Part 4: New Business Acquisition Edition: Total Loss of $750K (Coming soon)
- Part 5: Start-Up Investment Edition: Total Loss of $23K and more (Coming soon)
