Too Good To Be True

 

 

I have been working in the real estate investments business for almost 15 years now. During these 15 years I have worked in the U.S., London, North and South Cyprus, Bulgarian and Israeli markets. Although I sold a lot of investment property, apartments, vacation homes, etc, I have never been involved in a real estate investment that gives more than 200% profit…until now.

 

When I sold income producing property in Cyprus and people expected to make a profit of 40-100%, during a 3-5 year period, I sold apartments like hot cakes. No one doubted that they could in fact make these profits since they knew that Cyprus was about to enter the EU and therefore expected real estate prices to rise as they do in all other countries entering the EU. And they did rise. All my investors made at least a 50% profit when they sold their property, most within 1-2 years.

 

Currently I am working in Real estate development in Bulgaria where we have purchased residential land in the most beautiful area of the city for building a gated community of private homes and apartments. We are in the process of getting our building permit and plan to start building next year. We are offering the opportunity for investors to join in the project and earn very high developer's profits of about 177% for a 3 year investment period. That means 65% per year for 3 years. For small investors, those types of profits are almost unheard of, sort of too good to be true.

 

When at  first  potential investors see our advertisement  offering 177% profit within a 3 year project,  they are intrigued and ask for more information.  But then as time goes  by, they say to themselves, "No way. It's too good to be true." The nice ones politely thank me for my time and tell me they are not interested at this time.

 

Some investors have told me, "you sound like such an honest person (I like to think I am) , but it's not possible to actually make 177% profit! So where's the catch? It's just not possible" Investors who do not have experience investing in developing markets cannot fathom that 177% profit is possible; therefore, there must be a catch, a trick or a scam. They are sure they are going to see themselves on Kolbotek if they invest in such a deal. The irony of it is that when we actually start selling the project the investors will probably make more than 177%. I wouldn't even dare suggest this. Our business plan is quite conservative. We over-exaggerated on the building expenses and under-exaggerated on the selling price. So what IS the catch? There isn't any! These people are going to make tons of money.

 

For those of you who have read this far, I will tell you some of the reasons that the profits are so high. There are still places in Bulgaria where you can make these kinds of profits. Of course w are not the only ones in Bulgaria working on projects with triple didgit profits. Plovdiv has not yet had enjoyed from a huge real estate burst like Sofia, Burgas, and Varna, and its neighbor, Romania. Firstly, the founder of HGS Group, Naftali Halevi succeeded in purchasing the properties at about 50% of their current value. Secondly, we operate at a very conservative expense level, something like a family business where every cent counts. And thirdly, very simply, the difference between the total cost of the project and the selling price gives us and our investors these strong profits. I show the investor full information for understanding the business plan as I have pages of documentation backing up every number in our business plan. However, still something in the Israeli experience doesn't allow us to believe we can make a 177% profit in real estate. And so then comes the doubt if it's really possible and even worse, if I'm telling the truth.

 

So here's the dilemma. Do we advertize the real profits of 177%, based on today's costs and sales prices? Or do we bring the numbers way down so that it will look like they will earn only 100% profit so that it is easier to sell? Strange dilemma. In the meantime, we're presenting the real numbers. Any suggestions? I would love to hear your opinion.

 

I wish all of you tremendous success in your real estate investments.

 

Barbara Paz

Owner and CEO at HGS, Israel

www.hgsgroup.co.il