The investor who made all the possible mistakes
# Entrepreneur of the Week: Giving Her Loves # Post 5
As part of the monitoring I do of the market in which I work, I of course keep track of every apartment that is advertised for sale, but beyond that I also keep track of apartments that are advertised for rent. Sometimes changes in the neighborhood can be identified with the help of such tracking and rarely (I did not get it) you can even turn an apartment owner who wants to rent into an apartment owner who wants to sell.
The rental market in Eilat, which is currently boiling, does not leave too many minutes of glory for ads on Yad2 and Facebook from the moment they were published until the moment a lease on the apartment was signed, but there was one apartment I came across several times and decided I must understand what is happening there.
The apartment is located in a good neighborhood that I know well (to be honest I grew up in this neighborhood). This is a classic neighborhood for young, quiet families, which is close to kindergartens and elementary and post-elementary schools and there is even a nearby gas station that all of Eilat will indicate that it is a huge plus, considering that other gas stations are located far from the neighborhoods.
I arrived at the building and as usual scanned the area. Even before I entered the building, I recognized the first mistake of that investor. There are cracks along the building. For those unfamiliar with the neighborhood this may not be a problem, as the cracks are only visible in the outer shell that was renovated several years ago, but I know a number of buildings in the area are already considered dangerous structures.
The entrance itself was neglected on a terrible level and this is another mistake. This is actually a building that is in the center of the neighborhood but does not match the standard of the rest of the neighborhood, so for the innocent tenant there is no reason not to look for an apartment in the next building.
I went up to the apartment and as usual, I counted stairs while climbing. 48 steps without elevator! Please note, this is a three-room apartment in a neighborhood whose anchor is schools and kindergartens. Imagine a young couple having to climb 48 steps with a baby stroller and shopping from the supermarket.
I knocked on the door and there was no answer. I knocked again and the neighbor upstairs (56 stairs, poor thing) went out to check what was going on in the stairwell. I exchanged a few words with her and she told me that the landlord hated all the neighbors. He illegally distributed the apartment and rents it out every time to unsympathetic people who harm the quality of life of all the building’s occupants.
I finally got into the apartment. As stated, this is an apartment that was originally in my opinion a four-room apartment and was divided illegally. The part presented to me included two large bedrooms, a toilet and shower not exceeding 4 mXNUMX and a kitchen measuring one and a half meters. You read that right, a meter and a half kitchen. Inside the kitchen counter is a sink and next to it there is a place that can hold a cutting board. The living room is actually a TV and a small sofa that are in the space that separates the bathroom from the kitchen. overpowering.
So what were the mistakes of the property owner?
In my first conversation with the property owner, he did me some kind of phone interview that amounted to asking me if I work in Eilat (what if, I work in Jerusalem and every morning launches myself there). The property owner does not know how to properly filter his tenants or the condition of the property has led him to be desperate enough to fall below the tenant's standard, which of course will hurt him later on and create neighbor disputes.
The property owner did not conduct market research and did not know what the least good areas of the neighborhood were and in fact purchased the apartment in the worst area he could purchase.
The property owner tried to create an apartment that meets one general need of the market (a three-room apartment) without understanding in depth the real needs of the population and in fact created an apartment that is not suitable for any tenant. Singles or a couple without children do not need two bedrooms and on the other hand, a couple with a child will not be able to get by with such a small shower, toilet and kitchen.
The neighbors who live in the other half of the divided apartment are not sympathetic and even if the apartment was suitable for a young family, the neighbors who share the same entrance with them are a problem.
The landlord is in conflict with many neighbors and even if not consciously, is under threat that at any moment one of the neighbors can report the apartment to the municipality and he faces extremely high fines and renovation expenses for returning the apartment to its legal condition.
The rent, of course, is at the same level as that of the other apartments in the neighborhood and does not indulge in the many disadvantages of the apartment.
In my opinion, the apartment will stand empty for a long time unless the landlord lowers the rental price to a level that will brand the apartment as a single apartment with an extra bedroom as an extra. If not, I will continue to monitor the apartment until the landlord despairs and there may be an opportunity for a cheap cash transaction here (remember, the apartment is illegal and may be a problem taking out a mortgage). Of course there are other ways to market the apartment but they require a larger initiative which according to the mindset, does not exist with the property owner.
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