Keith’s Weekly Property News July 4-2021
Another very intense week on the ground. Some very good news, some a bit bad, and a small dose of the ugly. That is standard operating procedure in a complex Istanbul real estate environment.
Let us start with the bad. We lost 2-3 quality opportunities this week. Perhaps because we were slow to get off the mark and engage in negotiations or perhaps because we were second in line to other buyers. It happens. The model we are currently pursuing is as follows:
If we like the property, even if there is no buyer, we are negotiating, putting deposit down on it (from my pocket), cleaning up any paperwork issues, ordering valuation (usually we like to have buyer locked in at this stage), getting report; if all is good, we kick it over to the lawyer and ask them to organise the final transaction within 7-14 days. If there are any issues at this stage, I sen in the heavies to get my deposit back (haha). No, we have not actually had this issue. I am sure it will happen someday, but we will just write it off. Getting the properties we want matters more.
The good. We are closing on good deals that everybody seems happy about; lawyers, us, the clients. We see us hitting the targets: 5-6 % yield or more, usually buying under market 10% or more, sometimes getting renovation bump in capital of 10-15% or more, anticipating minimum 3-5% growth or more for next 3-5 years on the properties we transact on. Add in some compounding interest on rents and it looks like a really soft cushion. Come on guys and gals, stop hitting me on the TRY. If I knew about that, I would be sitting on an FX trading desk overlooking the Thames. Call me an optimist, but if it is worth anything, I am definitely ‘all in’ on Istanbul property. If we end up like Venezuela, I might be making the long trudge from Bulgaria to Western Europe. That is not going to happen. I prefer simit to strudel. As Tim pointed out, central properties in Venezuela (Caracas?) still sit at around 1K USD/sqm. Food for thought.
The ugly. Well, not so ugly. Our typical negotiation these days:
Owner asks for 1 mil TRY. We offer 950 + shared expenses. It goes nowhere. We close at something like 980- 1 mil TRY + shared expenses. Not quite a negative negotiation, but close. Keep in mind, we are already looking at the top 10% of the properties – ok, some turn out to be dogs- but on paper the ones that make it to our shortlist are in the top 10%.
My advice; try not to get too hung up on how the negotiation goes. Look at the big picture. Is the all in price good value? I can always give you a pretty quick answer on that. Run the numbers by me and we can come up with a clear picture. If the targets above cannot be met, then it is a pass. If they are likely to be met and I do not see anything fundamentally undesirable about the property, then I endorse it. If you are waiting for the blazing hot deal, I am ok with you waiting, but with the caveat that it could take a long time. I recently moved on one that was borderline for me. But I had been waiting 2.5 months. That was too long for me.
The take-away from all this: at least there are no bidding wars. We just have to focus on the bottom line, not the results of negotiations. We literally negotiated on at least a hundred properties last month. The above is an accurate reflection of how those went. Sometimes I do the negotiations, sometimes Eren, and sometimes even a 3rd party. Results are the same.
Of course, and I say in general, higher valued properties (over 2 mil TRY), may have a bit more margin for negotiation.
We are often hit with price increases mid-negotiation. On principle, we always walk.
We often also stick in low offers, but rarely hear anything back.
Despite all of the above, we are moving properties. This week, we will be even more aggressive throwing down deposits on properties we like personally, and then shopping them around to clients.
There really is a lot more happening here on the ground than I could ever summarise in what I aim to be condensed notes. To get in on all of that, you really need to be here. Our Sunday sessions are the next best thing of course.
I may try to do a live feed of one of our afternoon property tours, just to give you a feel of how it is on the ground.
I am not sending out links this week. We will informally go through a number of properties tonight on zoom.
Tagged: Istanbul property, buying property in Istanbul, central Istanbul, Istanbul apartments, Istanbul buildings, Istanbul investment, Istanbul property, Istanbul property sale, Istanbul real estate, Istanbul renovations, Property in Istanbul.