Ep355: Ibrahim Kocagoz – Do Your Research Before Investing in Property

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Quick take

BIO: Ibrahim Kocagoz is the Technical Director at SODEXO Thailand, responsible for Innovation, Smart City & Systems, and Sustainability.

STORY: Ibrahim and his wife bought several apartments in Istanbul. The plan was to retire soon at a vineyard, making wine while receiving income from the apartments. However, the Turkish currency started devaluing, throwing off the value of the flats. Ibrahim could only charge half of what the apartments were worth when purchasing them.

LEARNING: Do thorough research before investing in property. Real estate is high-risk; be careful when investing in it. Understand the currency risk concept before investing abroad.


“Learn a lot about what you want to invest in and try to invest in more than one sector.”

Ibrahim Kocagoz


Guest profile

Ibrahim Kocagoz is the Technical Director at SODEXO Thailand, responsible for Innovation, Smart City & Systems, and Sustainability. Before joining SODEXO, Ibrahim worked as a Smart City Project Manager in Qatar for almost seven years. Ibrahim received a Bachelor’s Degree in Electronics Engineering from the University of Istanbul, Turkey, in 2004.

Ibrahim has more than 15 years of experience in urban development, oil & gas fields, and industrial projects. He has excelled at engineering, construction, commissioning, research, development, and management, especially for systems integration, instrumentation & control systems, and sustainability.

Worst investment ever

Ibrahim and his wife talked about investments, and they settled for real estate. They believed that it was stable and it would gain in the future. So they bought several one-bedroom apartments in Instanbul.

The plan was for the couple to, later on, move to the South of Turkey, buy a vineyard and produce wine while getting rent from the apartments.

The currency issue

Soon after they bought the apartments, the Turkish currency started devaluing, so the apartments’ value went down. Ibrahim, thus, had to lower his rent to get tenants. Selling the flats was not even an option because he could never sell them for a profit.

The currency recovered after a few years, but Ibrahim could not increase rent, and so he lost 50% of their expected value in rent collection.

Overlooking important investing factors

There are two things that Ibrahim and his wife overlooked when they decided to invest in real estate. One, they assumed that Instanbul, being the largest and most popular city in Turkey, would be more profitable in terms of rents. However, the city of Izmir has better incomes.

The second thing they overlooked was the performance of the currency. They did not do any research to see how the currency was changing and if it was stable or not.

Lessons learned

Do thorough research before you invest in real estate

Real estate is a high-risk investment because there is no guarantee that you will make a profit. It is, therefore, imperative that you do thorough research before you decide it is the right investment option for you.

Diversify your investment portfolio

Do not invest in just one sector; diversify your investments. At the very least, invest half of your money in different stocks and the other half in a sector that you understand fully. Doing this will help you reduce your risk.

Andrew’s takeaways

Investing from abroad means you’re making two investments

Most people live and invest in their home country. And therefore, the concept of currency risk is not a big thing. But when you live outside of your country and want to invest back into your home country, you will make two investments.

The first is you have to buy the currency of that country and then buy the underlying asset. Many people forget about this, but it’s important to think about currency risk because you could greatly gain on the underlying asset. Still, if the currency devalues, you lose that gain.

Real estate is a high-risk investment

On the surface of it, rental property seems like a good investment. But there are several problems with it. First, you can have a lot of supply but little demand making it hard to resell at a profit. Second, there could be a crisis, such as the Coronavirus pandemic, where many people are never going to get the gain that they thought they’d get on their properties.

Property is illiquid

You cannot just wake up one day and say you do not want to own your property anymore and then just get out. It takes time to sell.

Do not buy rentals during an inflationary period

We should expect to experience inflation around the world. Most people may think this is the time to own property, especially rentals. However, this is not a good idea because it is hard to increase the rent. After all, salaries are not going up. Land and physical assets offer some protection against inflation.

No. 1 goal for the next 12 months

Ibrahim’s number one goal for the next 12 months is to bring his smart city vision, sustainability, knowledge experiences to more countries, including Vietnam, Laos, and Myanmar.


Read full transcript

Andrew Stotz 00:02
Hello fellow risk takers and welcome to my worst investment ever stories of loss to keep you winning in our community. We know that to win in investing, you must take risk, but to win big, you've got to reduce it. And I bet you're exposed to investment risk right now. To reduce it, go to my worst investment ever.com and download the risk reduction checklist I've made specifically for you, my podcast listeners based on the lessons I've learned from all of my guests, fellow risk takers, this is your worst podcast host Andrew Stotz, from a Stotz Academy, and I'm here with featured guests. Abraham kajagoogoo. Ebrahim, can you take a moment and say hi to the audience? Hello.

Ibrahim Kocagoz 00:52
Good morning from Thailand.

Andrew Stotz 00:54
Yes. In fact, we have that in common. We're both right, beautiful, Bangkok, Thailand. Let me ask you one very, very important question. Are you ready to rock?

I am.

Andrew Stotz 01:09
Alright. So let me introduce you to the audience. Ebrahim is the technical director of Sodexo, silent responsible for innovation, smart city and systems and sustainability. Prior to joining Sodexo, Ebrahim worked as a smart city project manager in Qatar for almost seven years. He received a bachelor's degree in electronics engineering from the University of Istanbul in 2004. Ebrahim has more than 15 years experience and urban development, oil and gas fields, industrial projects, where he has excelled at engineering, construction, commissioning research, development, management, especially for systems integration, instrumentation, and control systems, and sustainability. even take a moment and play for the tidbits about your life.

Ibrahim Kocagoz 02:05
your major, since almost three years, I'm in Thailand as a technical director, is you highlighted already, I'm working here for a couple of mega projects, most of the people they knew, for the XYZ food catering company, however, we are strong, worldwide strong, we are one of the biggest company in the world, in terms of Fisheries Management, security, management, housekeeping, etc. So my big goal is here to provide smart solutions to increase our efficiency of the operation. And I was in the Middle East for 10 years, as you already mentioned about Qatar I was smart city project measure over there almost seven years. And before I was in Russia and a couple of countries around the ratio, because eccentric means that for oil and gas projects, because my expertise is about systems, different, communicating different systems to each other. I mean, providing a communication platform, actually, I am engineer, I'm an electronics engineer. And before outside of Turkey, I was in a stumble, I was working for Motorola for the GSM sector. And actually, I'm from not part of Turkey from Samsung, but I moved to the Istanbul for the education for the university then I started my career.

Andrew Stotz 03:26
Fascinating. I mean, those are some interesting places. And it's also interesting. I mean, I know a little bit about Sodexo, but like you said, I know kind of the food aspect of Sodexo. But then you've talked about really so many different services that the company provides to companies, factories, facilities. That's pretty that's pretty awesome. I also wanted to say that my niece, Kristen, she's just turned turning 30. And she called me or sent me a message many years ago to tell me, I'm going on my summer holiday at our university. And I'm going to Turkey. And I said if you go to Turkey, I'm flying there to spend some time with you because it's kind of halfway between, let's say the US and Thailand. And so I flew to Turkey now that I contacted a couple of Thai companies that have operations there, one is called polyplex. And the other one is called CP foods. So I arranged to go visit their factories in the two cities very opposite directions. Actually. One day, we went to one and I brought my niece and the next day we went to another and then we went to a town called iznik.

Ibrahim Kocagoz 04:37
So yes, it were the CPS.

Andrew Stotz 04:40
Yes. And there I just had this really great experience. There was a Turkish guy, and I see my niece and I'd finished our factory visit. We were walking around like the town square. And this guy came up to me says hey, we're gonna have a festival of dancing of ethnic dancing. from around the region as a wow. And he said, Come join. And he sat us down in the front row. And then we enjoy these amazing dances, Kazakhstan, Uzbekistan, and many other places, beautiful outfits, of course, in Turkey also. And it was just such a great time. And the funny thing was that the guy said, he said, Where do you live? And I said, Well, I'm American, but I live in Thailand. He says, I go to Thailand all the time. He says, I have a travel business. And I'm back and forth with Thailand. And so he and I have become friends over the years. And I maintain that friendship. So I had such a great time there in Turkey. And I really would love to get back. So that's my little story about Turkey.

Ibrahim Kocagoz 05:42
Okay, sounds very nice. Exciting, also,

Andrew Stotz 05:46
yeah, in fact, Kazakhstan is another place, you know, I'd love to go to I just haven't had time to go. But I just to get some of those, you know, countries like Kazakhstan and Uzbekistan, and some of those have some really rich history and just some some fascinating things that I want to go see. You know, related to, for instance, the Silk Road and other things like that. So, I and Russia to I have some great friends through CFA in the Chartered Financial Analysts community, living in Russia, and I've talked to them before, I'd love to go. So I am jealous that you've been to some of the places I want to go.

Ibrahim Kocagoz 06:22
Actually, one of my plans before the COVID, we were planning with my wife to take a Siberian Express from Europe. Yeah, actually, it's a good idea. You know, I mean, Andrew, and you can go through these countries and us of community every time he you can work online. Also, when you're traveling, it should be a good idea. And you can go all the way these countries Mongolia, I think you can include others also like China, etc. to be nice.

Andrew Stotz 06:49
Yeah, that's a great idea. And I remember, I went to China when China opened up a train going from Beijing to Guangzhou. And now it goes into Hong Kong. That train open, I don't know, five or six years ago, and I was there on the third day of opening. And I took the train with a friend of mine. Yeah, speed train. And it took a took, I think it was like nine hours from Beijing, to Guangzhou. And as I told my, my family and friends in America, it was like, waking up for breakfast in Maine, in you know,, in the north east of America, getting on a train, having breakfast, getting on a train and having dinner in Disney World, in Florida. Which is hard to believe for an American because we just don't have those kind of train systems. So that was pretty remarkable. All right, so anyways, well now it's time to share your worst investment ever. And since no one ever goes into their worst investment thinking it will be. Tell us a bit about the circumstances leading up to it and then tell us your story.

Ibrahim Kocagoz 07:54
Thanks, Andrew. I thought it would be the investment which became worse investment after a couple of years. It's restate. restate what has been apartment so I can tell you honestly. When I was there, of course, I mean, when we are doing investments, we are always discussing with my wife where to invest because they come in life. So we said okay, reset sable to gain in the future. But it didn't happen. It was happened because of the currency investment was in a sample specifically I can tell you because of the currency. Of course we lost, the value of the apartment is lost. Okay, it recovers. After a couple of years, it can recover definitely. But the issue is not about the capital that you put it because when we were planning to invest to buy an air estate state I'm in by a condo apartment. We thought okay, let's get a couple of one bedroom. And after 45 years old, I'm 43 years old. Still couple of months 44 years old. I was saying okay when I'm 45 and we can go back to the south of Turkey, a graveyard produce wine and we can get rent from the stumbles Yeah, we can get rent is correct, but 50 percentage less now because inflation will go up. It's going up already. And of course so it means I was expecting a income from that we were expecting so we lost 5050 is a very actually so now and the value also our partners if you want to sell there are many plenty bunch of apartments villas all over the world actually not healthy in Istanbul, Thailand. Also I think everybody is a construction now are building new buildings, houses and of course it's a nice To sell with the same value, so you are losing value from there also. So we buy Istanbul, we because we were thinking this easy to manage is our home country. It could be some old Kobe city in Turkey, but we said he stumbled because by renting an apartment in stumble, you can live anywhere else in Turkey. It was also wrong, because there is another city in Turkey Izmir it came more popular in last five years and ends incomes much, much better. So, all the analysis that I done, while I didn't This is the biggest problem, I think this is just changing. So you shouldn't do the investment investment assumptions. I mean, we buy Okay, a couple small things maybe mobile phone to sell later on a sister, but buy a condo real estate, I think we need to do right analysis correctly, they come in about the economical financial feature of the country, of course, how is the currency is changing, is it stable or not? This is what we were told it cannot reverse reverse the currency. So, as I mentioned, I mean okay value of the apartment, it can maintain later on, because of the inflation but income, because you cannot increase I mean, you need to to yourself to live in a location A if you are living in an apartment, if you are paying rent, your salary is not increasing that much. So you need to think I mean, we are not able to increase rent. So is we lost 50% of our expected value. Because first ever worse. So it's push our plans. A great this mine yards as to the future. Exactly.

Andrew Stotz 11:53
And that's what happens about worst investments is the big change our plans. So how would you summarize the lessons that you learn from this experience? Very good.

Ibrahim Kocagoz 12:04
We shouldn't invest. In my opinion, of course, this is what I learned. Even there's a risk to invest the money to another sector also, not the sector or if the state you can buy if you can, of course from another country, or if you cannot then buy anything, invest to energy is meant to do some you need to take will take because it was my second biggest mistake. My brother in Turkey owns a company is doing automation, he has got 140 employees, his own loss is electrical engineer. So we were playing TMS on the solar energy. But then Luckily, we didn't started, he informed me that there are now many investors. And the demand is that much energy costs are going down same time, by the way. Yes, just two years, everything has changed. queries ago, there was not many visitors just four or five now, maybe 500. I mean, there are many everybody is investing. So I cannot imagine you establishing a company here you own stuff, office, etc. And, yeah, I mean, so what we learn cases are learned, of course, before investing, so I'm doing more studies about what I need to invest. And I'm not trying to I'm trying to avoid investing to the one sector. Definitely. And it should be I think it's better to make it 5050. And there should be also some investments on the risk items, if you don't take risk. I mean, we should get but of course you need you can reduce the risk versus like 10% or 20% that you can invest some stock market in different markets in the US it can be Yeah, I mean, different sectors different play. This is what I learned was an expensive lesson. But it's okay. I mean, health is more important. This is another lesson learned. I mean, in any case, we should be perceived. I mean, in any age we can work. We should know I need to work out okay. Why not? But there are many miners. Everyone wants to have a wine yard. This wine, of course, it will be it was planning they will be planning to also sell, but it also became popular.

Andrew Stotz 14:31
Yeah. Okay, so let me summarize what I took away from your story. First of all, I, you remind me of my guests. Attila, who was a friend of mine is a friend of mine, and he was Episode 15. So for those people that think that I'm the worst podcast host today, I was really, really worse, worse, worse back then when he and I talked, but he had made an investment in an energy related business and then the government changed the policy related to how it was paid. And he and his partners lost pretty much, you know most of their money. And so a couple of takeaways, the first thing is most people are investing in their home country, and most people aren't traveling around and all that they're just living in their home country, they're gonna retire in their home country. And therefore, the concept of the currency risk is not a big thing. Right? I mean, nobody wants to live in a country where the currency is devaluing or depreciating, because then they just can buy less foreign things. And maybe inflation is going up. But even if that's happening, you can still survive in your own country. But when you invest outside of your country, and now you're kind of an international citizen, making investment back into your home country, now you have two investments. The first is you have to buy the currency of that country, and then you buy the underlying asset. And I think many people kind of forget about this, and you could have a great gain on the investment, the underlying asset. But if the currency devalues, you know, and, you know, Turkey is an example, where there was a huge devaluation, Thailand had a huge devaluation, back in 1997. Russia had a huge devaluations over time. And these are, you know, markets that can be hit very hard. So I think the first thing is about understanding that you're investing in a currency and an asset. The second thing is just the idea that on the surface of it, condos, apartments, property seems like a good investment. But you know, there's some problems, the first thing is that you can have a lot of supply Come on stream, and all of a sudden, your dream of selling that 20 years from now, at a really high price is not going to happen. There could be a crisis, like we're facing right now, where many people are never going to get the gain that they thought they were going to get on the house. Also, on any property. Also, you know, property's got to be kind of in the right place, you know, as you mentioned, was it I think it was your brother or someone that had property in a good place, or there was a town that it was doing? Well, you know, you can do well. And sometimes people talk about the gains they're making in those great places. But that's not every place. And then, you know, the other thing to remember is that property is illiquid, you can't just wake up one day and say, I don't want to own this anymore, and then you get out. It takes time, you may have to take, you know, just it's not a liquid asset. And the last thing that's an interesting point is that I believe we're heading into an inflationary period where we're going to experience inflation around the world. And if we experience inflation, a lot of people think that you want to own property. But the reality is, is that most of the time when people think about property, they're thinking about rental. And rental is not a good thing on when inflation is rising, because it's hard to increase the rent. rent is kind of contractual. But if you're a consumer product company, and you just want to increase the prices of your product, you can do that. So when we talk about inflationary periods, owning land, and physical assets, is some protection against inflation, but not owning necessarily rental property. So I took a lot away from it, there's a lot of things that anything you would add the things that I just mentioned. Yeah, a

Ibrahim Kocagoz 18:21
couple of things. Also, he was in, he came to my mind, of course, when we were talking about these things, and what I missed also, this is another thing. It was in both sides for the stock market. Also I was saying, okay, like in this to this company, or shall I buy an asset from Germany? Or is it too expensive or exact? I mean, this is also another thing, they missed chance. Okay. But we shouldn't look from this perspective, of course, because if you do the right analysis, of course, if you do study, I mean, you invest it, so it's can things can go wrong, some most of the things I mean, usually it starts in our handy, I mean, you see I mean we are talking about mobile or a counterweight economical problems, economical issues or we can say it's affecting actually our investments is usually the type of investments have talked about. So, we should keep positive Of course, then next time, we happen to invest to segregate multiple sectors and take a little bit smaller risk also when we are investing, make it small. Also, and because you see we invested on the stable market we thought and we low risk because we said a nurse case okay. Apartment will be owned by us. You can leave it but you cannot live in multiple apartments and there is also payment that you need to pay to the facilities etc. There are many things that are attached to many things. So This is what I can conclude from my site. Andrew. Thanks so much. Really, it was really nice topic.

Andrew Stotz 20:07
So, last question, what's your number one goal for the next 12 months?

Ibrahim Kocagoz 20:12
Yes, this is also a nice question. This is my plan since middle of last year actually, because we I said, Okay, 2000 22,021. I have to, of course, these nice projects here in Thailand, which I achieved, I built a command center. But now next step is to manage more countries in terms of like, Vietnam, Laos, or Myanmar, because this is what we are planning to have operational. So is this what extra Thailand and I'm going to bring my smart city vision, sustainability, knowledge experiences to these countries? Also, this is my biggest advice

Andrew Stotz 20:55
for writing essays. That's exciting. Yeah. All right, listeners, there you have it another story of loss to keep you winning. My number one goal for the next 12 months is to help you my listener to reduce risk in your life. So go to my worst investment ever.com right now, and download the risk reduction checklist and see how you measure. So as we conclude, Ebrahim, I want to thank you, again, for coming on the show. And on behalf of a Stotz Academy, I hereby award you alumni status for turning your worst investment ever into your best teaching moment. Do you have any parting words for the audience?

Ibrahim Kocagoz 21:35
Thank you very much, Andrew. And thank you very much to everyone. All the listeners, although audience, I can say thank you. I was in a cocoon crop.

Andrew Stotz 21:44
There you go. All right. Well, that's a wrap. And as you just heard, copy and grab. That's another great story to help us create, grow and protect our well fellow risk takers. This is your worst podcast hose Andrew Stotz saying. I'll see you on the outside.


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About the show & host, Andrew Stotz

Welcome to My Worst Investment Ever podcast hosted by Your Worst Podcast Host, Andrew Stotz, where you will hear stories of loss to keep you winning. In our community, we know that to win in investing you must take the risk, but to win big, you’ve got to reduce it.

Your Worst Podcast Host, Andrew Stotz, Ph.D., CFA, is also the CEO of A. Stotz Investment Research and A. Stotz Academy, which helps people create, grow, measure, and protect their wealth.

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