U.S. Real Estate Firm Finds Vibrant Housing Market -- in Iraq
Two college students in Minnesota think they have finally found a housing market with growth potential. Their Forex Realty Consultants links expatriate Iraqi property owners in the U.S. with buyers in Iraq.
It just goes to show that there are always housing deals to be made -- they just might not be right under your nose, or even on the same continent.
The two 23-year-olds, Ishraf Ahmad and Derrick Turner of St. Paul, aren't getting rich off their idea yet. But they have mapped out a business plan that gets them and Baghdad-based partner Ali al-Robaie 3 percent to 7 percent commission on each Iraqi property they sell. (Smaller and rural properties are charged a higher commission.)
So far they have sold a handful of residential and business properties that have taken anywhere from five months to nine months to move. In December they made a $400,000 sale but currently have an $8.6 million listing that was once owned by an ambassador.
Iraqi expatriates are finding this to be an ideal time to unload property they may not have seen in years. As was the case with the parents of Basil Fayadh, a 35-year-old currency trader in New York City. They left behind a home in Iraq five years before their son was born. Navigating the red tape -- what Turner calls "Iraq-cracy" -- can be tough to do for property owners, and even tougher for those no longer living in the Mideast.
"The Iraqi bureaucracy, while very thorough, is cumbersome and inefficient," Turner told HousingWatch. "The various government institutions we deal with, in order to create the proper documentation to affect the sale, constitutes most of the time we spend completing a transaction."
"Getting all the documents together and verifying the legalities, they do take a while," added Ahmad, and that's where their partner on the ground in Iraq gets the job done. Al-Robaie, also 23, was born in Lebanon and raised in Sweden, but spent considerable time with his family in Iraq. He was recruited by Ahmad and Turner when the Minnesota roommates found him via a Craigslist search.
In 2008, Turner, who was raised in Moorhead, Minn., and has never been to Iraq, asked his roommate to help him develop a business that could capitalize on rising property values in the wartorn country. Ahmad, who was born in Bangladesh and moved to the U.S. when he was 16, didn't know much more about Iraq either. But he learned more working on a political science poster project at Carleton College that compared the Iraq conflict to the Vietnam War.
Turner came up with the real estate idea while studying abroad in Europe. Neither of the partners have real estate licenses. Since they are only acting as consultants facilitating the sale for the homeowners, none are needed. However, they follow the same standards as U.S. realty professionals, says Ahmad.
"People in Iraq select real estate representation based on the same factors people in the U.S or Canada care about," says Turner. "Reputation and professionalism are crucial if people are going to trust you with the largest purchase or sale they are likely to make in their lives.
"We consider ourselves a local agency, most of our operations are in Baghdad. We have the same operational capabilities as local agents. However, we have an international office and staff, and the advantages that come with that."
Those advantages? "Reliable Internet and telephones, prompt response times, and business hours during the times [expatriates in the U.S.] are awake give us an advantage over real estate firms based solely in Iraq," says Turner. "We try to be available to clients through any communication platform they desire to use whether it is telephone, email, Skype, instant messenger or text message."
Forex Realty spends about $20 a day on advertising, which is focused on purchasing Google AdWords. A Google search for "Iraqi real estate" is how Fayadh found the agency that helped his parents. He told the Associated Press that the realty company's "inexperience showed," but that they handled themselves like professionals. In the end, Forex Realty helped Fayadh's parents' sell the home to its longtime occupant.
With "forex" in its name, a shorthand term for foreign exchange, there is no reason the business couldn't expand to other markets in the future, says Ahmad. "If the opportunity arises, we do have intentions of expansions to other countries, but for the moment we have our hands full with Iraq."
Iraqi real estate prices have risen considerably in recent years because security has improved, funds from oil production are expected to rise, and housing is lacking, investment advisor Gavin Jones told The Associated Press. He's co-founder of Upper Quartile, an Edinburgh, Scotland-based firm that's working on strategy for Iraq's economic reconstruction.
As always, thought, investing in an up-and-coming neighborhood has its rewards -- and plenty of risks.
See property for sale in the U.S. at AOL Real Estate.