High-Tech Entrepreneur Finds Real Estate Ownership Riskier and Costlier Than Startup Investments
Udi Netzer, a veteran venture investor, faces significant losses in the housing market. After buying a Tel Aviv apartment for 6.7 million shekels, he realized that canceling the deal and losing 540,000 shekels is more rational than proceeding with the purchase.
Udi Netzer is one of the veteran high-tech entrepreneurs in Israel. He was a founder of the Evergreen venture capital fund and the first investor in the company Comtouch (defunct). For the last 15 years, he has served mainly as an angel, investing in at least 40 startups, and as is the way of young companies, not all of them managed to reach the finish line.
Naturally, Netzer also knows very well what it is to lose tens of percent of an investment. It is part of the risk-reward and the rules of the game for any entrepreneur. But this week, he realized he got burned in a much more "solid" industry. At the beginning of 2024, he bought an investment apartment in northern Tel Aviv for 6.7 million shekels. These were days of high interest rates and quite a few warnings that apartment prices had already risen too much, but he says that "there was still a kind of momentum in the housing market, the contractors' promotions were aggressive enough, and of course the 80:20 deals were also tempting. I got dragged in."
Worth "throwing in the trash" half a million shekels
Netzer's deal is a great example of those "aggressive promotions." Upon signing the contract, he paid only 340,000 shekels for the apartment—5% of its price. The rest, 95% of the price without linkage and additions, he was required to bring only at the time of receiving the key, which is expected to arrive before the end of 2026.
And now, even if he might not be short of money, what he is short of is the rationale to complete that deal—even though canceling it will entail a fine of 200,000 shekels, according to a "cancellation fee" clause in the contract, in addition to the 340,000 he has already paid.
According to Netzer: "This week I discovered in the buyers' WhatsApp group that my neighbor, who bought an apartment exactly like mine, is putting it up for sale for 5.7 million shekels. A million shekels less than the price I am committed to. And he has to make a decision by September, the date he is required to complete the deal. Originally he planned to sell the apartment before receiving the key, and now he can't even get a mortgage on it because he is already leveraged on another apartment."
In simple and sad math, it is worth it for Netzer to "throw in the trash" 540,000 shekels—the money he paid and the fine that will still come—even to buy the neighbor's apartment. Especially since that neighbor is not getting too much interest, and he may compromise even against the updated price.
"It's a huge cultural shift, it affects the market"
Netzer attributes the drops mainly to a change in the preferences of the young—who prefer that the capital they have accumulated work for them in the capital markets, and also prefer the flexibility and liquidity that rental housing offers them. "It's a huge cultural shift. I rub shoulders a lot with high-tech youth, and it affects the market." Dr. Doron Sayag, director of the housing indices department at the Central Bureau of Statistics, also said this week that the rate of households planning to purchase an apartment dropped in the CBS surveys from 8% to 3.6% in 2025.
For Netzer himself, it is a decision to "cut" a loss with damage of half a million shekels.
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