Heating Homes in Israel

When heating rental properties in Israel during the winter, safety and cost efficiency are the clear priorities for all landlords, tenants and property managers.

Israel’s winter season is short but can get very cold, particularly since homes are built to stay cool and are not insulated to stay warm!

As experts in managing properties in Israel, at Creative Estates we are conscious of the need to provide heating and cooling for the rental homes that we manage. Today it is recognized as potentially dangerous to use bar heaters which can easily catch fire, so we make sure that tenants are using safe radiators and making appropriate use of the heating systems that exist.

Standard Israeli Heating Systems

Air conditioning systems are widely used for heating in the winter, particularly in Central Israel where winters are generally mild. They are cost effective and only require slight modification of the vent direction between summer and winter use.

Hot water supplies in most Israeli homes are generated by solar energy, with solar panels and hot water storage tanks on the roofs of most buildings. In the winter, the lack of sun can leave tenants without sufficient hot water, so most homes have secondary hot water systems. These can be powered by electricity or gas, and usually include timer systems so that tenants can program them to provide hot water at the times they want to take showers.

Installing New Heating Systems

When updating properties and considering heating options, we usually recommend that property owners switch to gas, which has become much cheaper than other fuels in recent years, and particularly since Israel discovered and started to use its own offshore gas reserves.

Installing underfloor heating is a popular facility to add when a property is renovated, because it is necessary to take up the floor tiles in order to lay hot water pipes. This is particularly worthwhile in Jerusalem and other towns where the temperatures frequently drop to freezing.

Safety First

While tenants prefer to keep doors and windows closed when heating their home, it is important that heating and hot water systems have sufficient ventilation systems for safety. Where heaters are powered by gas, rooms must be well ventilated so that poisonous and toxic fumes can escape. It is also highly recommended to install smoke alarms and even carbon monoxide alarms near such heaters.

If you are a landlord and you would like advice on the most cost-effective and safe way to heat rental properties in Israel, contact Shaun Isaacson at Creative Estates Israel.

Israel Housing Prices: Reviewing the Past Decade

Housing prices in Israel have risen by a national average of 47% over the past decade, with apartments in some cities appreciating by 78% over 9 years. How can potential investors take advantage of this trend?

According to a study by the property resale website Yad 2 (shown below), the prices of 4-room apartments throughout Israel have increased in almost every city since 2011. 2011 was the year of the street protests over the price of housing and cottage cheese. In response, the government of the day promised to implement measures to increase building projects and create more affordable accommodation.

In an attempt to help first time buyers, it was suggested that some homes would be marketed with 0% VAT. The only effect of this suggestion was to temporarily suppress the demand for housing during 2014-2015, while potential purchasers decided to wait for this discount to come into effect. When it failed to materialize, the build-up of demand was released and caused a spike in house prices in 2016.

The next policy suggestion was an increase in the purchase tax for purchasers of multiple properties, and while this was being discussed it caused a flurry of property purchase among investors rushing to beat the tax. Political horse-trading prevented the government from introducing this investment tax.

Planning and building new housing projects inevitably takes time, and Israel has a constantly increasing population, so demand continues to outstrip supply. With low wage inflation over the past several years, people who cannot afford to buy in the popular central cities of Israel have been buying lower-cost properties in cities like Ramle, Lod and Bat Yam. As a result, the house prices in these areas have increased more dramatically over the past 10 years than in more expensive cities like Tel Aviv, Netanya and Herzliya.

Property management and investment expert Shaun Isaacson explains: “Investment in transport infrastructure, connecting the central conurbations with the periphery of the country, is helping to expand the commuter belt and making more distant suburbs more popular. That is why we see the housing market gradually flattening out in the coming years, with a smaller differential between previously cheaper and more expensive cities.”

In Lod, a 4-room apartment that sold in 2011 for 856,000 would now cost 1,520,000 NIS – a staggering 78% increase. In neighbouring Ramle, prices have risen by 68% from 996,000 to 1,674,000 in 2019. At the same time, comparable apartment prices in Ra’anana have risen by only 27% over the same period, from a starting price of 1,777,000 to 2,260,000 NIS.

“While Anglo investors typically choose the cities that they know personally, it is often more lucrative to invest in lesser known and cheaper locations, where prices are rising faster. This price list is a snapshot of one aspect of the Israeli real estate market, but we have a much deeper understanding of which areas are most profitable for buy-to-rent investors, and we are happy to advise.”

You can contact Shaun Isaacson at Creative Estates Israel in complete confidence, to discuss profitable investments and property management in Israel.

Yad2 Property Price Survey

Is Real Estate Still the Best Investment?

Nineteenth century billionaire Andrew Carnegie famously said “Ninety percent of all millionaires become so through owning real estate. More money has been made in real estate than in all industrial investments combined. The wise young man or wage earner of today invests his money in real estate.” Is this still true, and does it apply to real estate investment in Israel?

The Rational Behind Real Estate Investment

The data suggests that millionaires still make more money from owning property than any other investment, because real estate consistently increases in value over time and outperforms other investments. The wealthiest people collect property portfolios the way they used to collect cars!

While other businesses may come and go, people will always need homes, and the need for housing generally increases year after year. There’s an inherent demand for real estate, because land can be used for so many different purposes, whether commercial or residential. Many people use real estate as a way of protecting their wealth against market fluctuations. Although the real estate market can go down as well as up, the overall value is always increasing, never decreasing.

Real estate is a real asset – it is tangible. It is also not as vulnerable to fluctuations as the stock market, which is subject to many factors outside your control. Unlike many equity investments, including banks and blue-chip companies, brick-and-mortar investments are unlikely to disappear overnight, Real estate is also flexible – if it appreciates you can sell it, and if the market is flat you can rent it out or live in it yourself. Property can be refinanced, redeveloped, and even repurposed if the market changes.

Today, cash kept in a bank is effectively depreciating, because interest rates are below the rate of inflation. This means that money is cheap to borrow, and many people take out bank loans to invest in real estate.

The Reality of Real Estate Investment in Israel

In Israel, it is not so easy to raise mortgage finance as it is in the U.S. and other easy-credit economies. Generally, banks in Israel will insist that the purchaser puts up at least 40% of the purchase price before taking a mortgage for the remaining 60%, and they often require proof of income.

The safest properties for investment in Israel are generally family-size apartments or homes in upscale locations that are always in demand. They provide a consistent cash flow and there will always be a steady supply of good tenants. Israel’s increasing demographics – through high birth rates across most sectors – are all good signals for investing in family homes. The same may not be true in other countries, where divorce rates and the fashion to remain single are favoring smaller property sizes.

Israel is a small country with an expanding population, high marriage and birth rates, and a constant flow of Olim (new immigrants). There are also many political and economic obstacles to releasing more land for development. This means that, despite government attempts to increase the supply of new homes, demand continues to outstrip supply. High property prices in Israel, that make it difficult for young people to rent, have created a strong rental market with good and steady rates of return.

Investing in real estate does not generally yield quick returns, but it’s the best option for long-term investment. At Creative Estates we recommend investing in residential or commercial properties that produce rental income year-round, and making sure that your investment is well managed so you don’t incur unexpected costs that can reduce your profitability.

Talk to Shaun Isaacson of Creative Estates Israel about the best real estate investment options currently available in Israel. Contact us today.

Preparing Your Israeli Property for Rain

With the rainy season about to start, here are our top ten tips for preventing any floods, leaks or pipe bursts in your Israel property this winter.

Israeli homes are really designed for the summer, which is generally three times longer than the winter season. Most houses and apartments are built with stone floors, poor insulation and minimal drainage systems, unsuited to coping with sudden rainstorms and even snow in some parts of the country.

At Creative Estates Israel, we have many years of experience in managing holiday homes and rental properties and pre-empting winter crises. From experience we know that all properties, whether tenanted or empty, should always be thoroughly checked at the start of the winter to ensure that they are weather-proof. Here is our checklist.

1) Cleaning Gutters and Drains

Before the first rainfall of the season, make sure that water cannot collect in places where it may cause flooding inside your property, such as window ledges, door sills and air conditioner pipes. Ask your upstairs neighbours to do the same, so that you do not find water leaking through your ceiling from their balcony. Your building manager (Va’ad Bayit) should also clear leaves and garbage from the drains and walkways around the entrances to the building, to prevent flooding and slipping accidents.

2) Checking for Leaks and Cracks

Water can seep through the smallest cracks and will always find the weakest points through which to escape, often causing leaks or dampness in the walls. You may be able to see the marks of damp or mold on the walls or ceilings showing where last winter’s leaks occurred. Persistent dampness during the winter months can cause allergies and breathing difficulties, as well as damaging furniture, furnishings and the building structure. Landlords are expected to protect their properties against leaks and dampness, and they may be held liable for damages caused to their neighbors if they fail to do so.

3) Water Heating Systems

Most residents and tenants only turn on their supplementary electric water heater when the weather turns cloudy and cold. If it has been unused during the summer, it is sensible to check your water heating system before you turn it on for the first time. Boiler systems may be used to power radiators as well as providing a supply of hot water, so you should have both functions checked. Lives can be saved by removing bird’s nests and other blockages from flues, because if the ventilation system is blocked when the boiler is turned on you might cause carbon monoxide poisoning. When calling a maintenance engineer, remember that Israeli boiler systems are known collectively as ‘Yunkers’, named after the original Israeli manufacturer.

4) Central Heating Systems

In apartment buildings, the central heating may be centrally controlled by the management committee, with fixed dates for turning them on and off. Individual apartments may have supplementary air conditioning units or other electric room heaters.

5) Positioning Room Heaters

Put safety first when positioning and using electric room heaters. Keep them out of reach of children and make sure that soft furnishings – curtains, cushions, mattresses and clothes – cannot fall onto them and cause a fire.

6) Adjusting Air Conditioning Units

Many people choose to use wall-mounted air-conditioning units for heating during the summer. If so, it is crucial to adjust the vents so that they point downwards to send warm air circulating around the room. Otherwise the upwards setting that you use for cold air in the summer will just heat your ceiling! Remember to clean the filters too.

7) Adding Window Insulation

Israeli homes have very little insulation, so precious heat can be lost through windows and walls. It may help to check that your trissim (window blinds) close tightly and do not rattle in the wind. Hanging curtains and putting draught-excluders along cracks in walls and under doors can keep help to keep the cold outside and the heat inside.

8) Preparing for Power Cuts

It’s not unusual for the power to go out at any time, so it’s good to prepare emergency back-up systems such as alternative power supplies for important appliances like freezers and computers, emergency lights for stair wells, and supplies of candles and matches. In some areas it is advisable to keep a kerosene heater or other non-electric heating source to keep you warm during extended power outages.

9) Protecting Water Pipes

If your home is in an area where the pipes may freeze, we recommend leaving a tap dripping slowly during very cold periods, to prevent pipe bursts. It’s a good idea to disconnect outdoor watering systems during the winter, to save water and to protect the pipes and connectors from damage.

10) Checking on Empty Properties

If there are empty properties in your building that are not taken care of, all the above problems can spread from their apartment to yours. Leaking pipes that go undetected can cause long-term water damage in other parts of the building. If you know that your neighbours are going away for the winter, recommend that they get a property company to check on their home.

Creative Estates Israel manages properties all over central Israel and we send our maintenance teams to every property to check that everything is ready for winter and stays water-tight. To speak to Creative Estates about checking and managing your property in Israel, contact Shaun@CEIsrael.com

Making Emotional and Intelligent Investment Decisions

Real estate in Israel can be an emotional as well as an intellectual investment decision. Many Jewish families around the world choose to buy a home in Israel, as a holiday home, with a view to retiring here, or so that their children can make Aliyah, or even “just in case”. Managed well, it can also be a profitable venture.

Owning a property in Israel is a sensible long-term investment, particularly when it is rented out to quality long-term tenants. Creative Estates manages a portfolio of diverse properties throughout Israel’s central region, from Haifa to Bat Yam. Our clients appreciate that we take care of their home as if it was our own, shouldering both the financial and the physical responsibilities.

From finding and vetting tenants and negotiating the rental contract, to managing contractors and liaising with the building management committee and insurance companies, our legal expertise is particularly helpful. We understand overseas investors’ tax liability and ensure that income and property taxes are paid on time. Insurance, utilities bills, rent collection and banking are carefully managed, and we submit monthly reports charting the return on your investment.

Saving you Money and Sparing you Headaches

As a professional property manager with many years’ experience, I am frequently asked whether the benefits of hiring me outweigh my costs. The short answer is yes:  My clients tell me that I save them money and headaches, because property management in Israel is more complex and time-consuming that they realized!

The real value of a property manager comes when something goes wrong. A burst water pipe in the building – typically on a Friday afternoon – is our problem not yours. We have a team of contractors standing ready to make emergency repairs, and we have experience in dealing with insurance claims to ensure that all the costs are covered. We’re here to protect your investment, and that includes organizing regular inspections of your property to ensure that it is well-maintained and weatherproof.

A good property manager knows how to keep your tenants happy and how to find new tenants when they leave, to ensure that your property is never sitting empty. As a native South African who has lived in Israel for most of my life, I know how to manage local contractors, and how to negotiate rental contracts and insurance policies to protect your interests. As a lawyer, I am familiar with regulations regarding rentals, landlords’ and tenants’ legal rights and obligations. Together with my maintenance team, I also manage holiday homes for many of our clients, keeping their beach-front properties in tip-top condition and getting everything ready for their vacation visits.

Spotting the Best Investment Opportunities

At Creative Estates, we stay up to date with all the latest real estate projects around Central Israel, so we can advise you on the best locations to buy properties. Buying properties off-plan in new developments can increase the return on your investment, but they require careful scrutiny throughout the construction process. With new train lines currently under construction throughout the region, we can tell you about the neighborhoods that will soon become prime commuter communities with excellent rental potential. Creative Estates can also help you to rent or sell your existing property in Israel, working with the top local agents and getting you the best possible price.

Shaun Isaacson is a qualified Israeli Lawyer, MBA and Real Estate Agent, and CEO of Creative Estates Israel. You can contact him in complete confidence for investment advice or a price quote for managing your Israel property at shaun@CEIsrael.com

Maintaining your Swimming Pool in Israel

Swimming pool maintenance is a major part of our summer program at Creative Estates Israel, but we actually maintain over 20 swimming pools all year round for our Israel property management clients.

Open air swimming pools require constant maintenance and attention. Your pool should be a source of pleasure and relaxation, not a source of stress and hassle! We help our clients by preparing their swimming pool for use at the start of the summer, or indeed at any time when they or their guests want to use it, and by checking and maintaining it all year round.

Essential tasks include cleaning and filtering the water, checking the chemical levels, maintaining the tiles, the membrane, and the area around the pool. Covers and fences also require maintenance, particularly during the winter, to make sure that they are not compromised. If something falls in the pool and goes unnoticed, it can clog up the filter and cause major mechanical problems later on.

We work with Israel’s leading swimming pool installation and maintenance company to manage all the pools on our properties. They install the latest hi-tech gadgets into all our pools so that we are alerted if there is a problem. For example, our clients have remote control via their smartphone to check the acidity, salt and chlorine levels in their swimming pool, and they receive weekly reminders for maintenance tasks that should be carried out. When they are away from their properties, they pass these reminders on to Creative Estates and we take care of the cleaning, filtering and troubleshooting.

Many of our clients have installed the latest cover alarms on their swimming pools, which alert them remotely if someone opens the cover on their pool while they are away or if someone forgets to close it. Again, our team are always on hand to check on what is happening and make sure that there is no safety issue with their swimming pool while they are absent.

If you have a property in Israel with a swimming pool and you want to make sure that it is professionally maintained, or if you are considering installing a pool, Creative Estates would be happy to advise and give you a competitive quotation.

7 Essential Israel Property Maintenance Tasks

Some landlords are just happy to sit back and collect the rent from their rental properties, but good property management companies understand the importance of carrying out regular maintenance checks to protect their clients’ investment. Failure to do so can result in costly floods, tenant complaints and lost rent.

These are just seven of the essential property maintenance tasks that Creative Estates carries out on behalf of its clients in Israel, alongside their regular financial and management tasks.

1. Checking for Leaks & Water Damage

Even the arid climate of Israel has a rainy season! Creative Estates always checks each property for cracks and gaps in window seals at the start of the winter, and also after heavy storms, to make sure that the drains on gutters and balconies are not overflowing and causing a build-up of water. Inside the property, we check pipes, boilers and under sinks, looking for early signs of problems and fixing them before they cause water damage. We also flush each of the toilets to ensure that they are working correctly and not wasting water.

2. Extermination of Pests

Ants, cockroaches and other pests can drive away tenants. Regular extermination treatment with environmentally approved and pet-friendly chemicals is essential to keeping any property in Israel pest-free.

3. Bathroom Caulking

Over time, the waterproof seal between baths, showers, basins and walls can dry out and crack. This can cause water to leak through and cause extensive damage. We regularly check the seals and grouting between bathroom wall and floor tiles and replace it as necessary.

4. Smoke Detectors

It is important to check smoke detectors regularly to ensure that the batteries have not expired and they are in working order. Tenants sometimes disconnect them to stop the alarm and forget to reset them. Smoke detectors save lives, and they should be replaced every 10 years.

5. Air Conditioning Filters

The filters in air conditioning systems of all types can become blocked with dust, which forces the system to work harder and increase utility bills. This can also cause malfunctions and leaks. It is usually recommended to check and wash or change the filters every six months. As with many systems, regular maintenance can help to keep them running smoothly so that they break down less and require replacement less frequently.

6. Mail and Utilities

Ignoring important communications that arrive in the mail but get ignored by tenants can cause major problems for landlords. We make sure to check all notifications from utilities companies, ensure that all bills and local taxes (Arnona) are paid on time, and communicate directly with the building’s management committee. We are constantly protecting the property owner’s interests, including checking that the consumption of water and electric consumption is correctly charged.

7. Relationship Maintenance

A happy tenant is a profitable tenant! We try to maintain good relationships with tenants and encourage them to tell us when something is not working in the property. That helps us to fix problems before they deteriorate, and avoids crisis call-outs.

If your property in Israel is not been managed and maintained to this high standard, you can talk to Shaun Isaacson at Creative Estates in complete confidence, and we will give you a price quote for taking over the job.

Bat Yam – the Cinderella City!

From rags to riches: real estate prices in Bat Yam, the southern “Cinderella” suburb of Tel Aviv, are rapidly catching up with the rest of the metropolis. T

Just a few years ago, Bat Yam was seen as Tel Aviv’s poor and run-down neighbor, despite its coastal position. Its housing prices were typically 20% lower than the neighboring city of Holon, which is further inland, but now they have overtaken them. Two years ago you could buy reasonably priced housing in the city of Bat Yam, south of Tel Aviv, but today the prices are almost on a par with other more fashionable Tel Aviv suburbs.

Bat Yam already has two stations on train route between Tel Aviv and Rishon Lezion. and it will soon have a terminus for the planned Tel Aviv Light Railway. Thanks to a dramatic urban renewal project, which has included upgrading the schools, public spaces and cultural infrastructure, the city now offers attractive options for families looking for suburban neighborhoods with a short commute to Tel Aviv.  As the standard of living in the city improves, Bat Yam will become a high-grade commuter community for the overcrowded metropolis.

Alongside residential developments for commuters, Bat Yam is also developing itself as “the New Israeli Riviera”. It has 6 beaches and a 3.2 km promenade along the sea front that connects up with the Tel Aviv boardwalk south of Jaffa. Three major hotels are being built, together with a park for outdoor cultural activities and a number of luxury high-rise apartment buildings. 

The Sea Park development occupies prime real estate on the coast to the south of the city, close to Rishon Lezion. Its developers have recently sold a number of luxury apartments and penthouses there for over 10 million shekels. Purchasers are willing to pay high prices for an apartment in a luxury tower with a view of the Mediterranean, because it is still significantly lower than comparable properties in central Tel Aviv. Foreign investors are among those snapping up these luxury bargains.

Further back from the sea, ordinary four-room apartments that were sold a few years ago for NIS 2.6-2.7 million are now selling for NIS 3.1-3.2 million. Such a rapid increase in housing prices would never have been realistic in the past, but there are two additional factors at play.  Firstly, the Bat Yam Municipality is giving priority to the building of smaller apartments and favouring the Tama 38 demolition and construction model. This is encouraging investors to buy apartments in buildings slated for redevelopment, in expectation of great returns when these medium sized buildings are replaced with tall towers, comprising many more apartments.

Secondly, a recent announcement by the Ministry of the Interior that the Tel Aviv and Bat Yam municipalities will be merged in 2023 may have added fuel to the fire. Property investors may be taking a view that Bat Yam will soon become a southern suburb of Tel Aviv, and expecting its prices to move toward those of its more exclusive northern suburbs.

The Bat Yam story is a typical Israeli fairy story, where a “Cinderella” city is magically transformed into a real estate “princess”. At Creative Estates we believe in looking beyond the obvious neighborhoods and identifying areas that are ripe for development, in the expectation that they too could undergo a magical transformation in just a few years!

Talk to Creative Estates Israel if you own real estate or are interested in investing in a property in Bat Yam or any other central city in Israel.

The Bubble That Would Not Burst

Predictions that Israeli house prices would fall once the government’s major construction projects hit the market have been proved overly optimistic. Excepting certain areas where the heat has gone out of the expensive housing market – Tel Aviv, Jerusalem, Ra’anana and Herzliya – house prices in Israel have continued to rise by 0.6% since February 2019.

The map of the Israeli real estate market is complex and influenced by many different factors, such as the construction of new public transport networks and population trends. The Kahlon Buyer Fixed Housing Plan led to the accelerated construction of new homes in Kiryat Bialik (a Haifa suburb), Beer Sheva, and the southern towns of Netivot and Dimona, but the demand for housing is stronger elsewhere, where prices are not affected by the increase in supply.

The district index measures changes in house prices in six districts, shows prices remaining stable in Northern Israel and Jerusalem, increasing in the Haifa district by 2.8% and in the south (around Beer Sheva) by 1.3%, and in the Central district (excluding Tel Aviv) by  1.2%, but falling in Tel Aviv by 2.3%.

clthough housing prices fell between late 2017 and early 2018, when investment purchases paused for a few months, the overall trend remains upward. This is driven, as we have said before, by strong demographic growth and Aliyah, as well as confidence in the Israeli economy and incoming investment. Although the overall supply of housing has increased, the new apartments were not built where they were needed. There is still a shortage of housing in Tel Aviv and Jerusalem, in charedi towns and in Arab communities, where there are no plans to build new homes.

Unless the incoming government’s housing policy is radically different from the last, we are unlikely to see a fall in demand or prices in the years ahead. We may see some cooling off of real estate prices in the most sought-after cities, as some of the demand is drawn away by new construction elsewhere. However, while employment continues to draw Israeli families to live where their jobs are, the center of the country will remain the strong beating heart of the Israeli housing market.

If you are interested in investing in property in Central Israel, talk to Shaun Isaacson from Creative Estates Israel about the best locations for buy-to-let investment and home purchase, or if you own a property in Israel already and need a reliable management agent.

New Reporting Requirements for Israel Property Purchasers

A new law will take effect on January 1 that required all Israel property purchasers to report the sources of their capital.

The Israel Tax Authority has introduced a new obligation to report on the sources of financing for all real estate deals from January 1, 2019. This is enshrined in the new Minimizing Use of Cash Law, which is designed to squeeze Israel’s black market by limiting cash transactions, in the hope of increasing tax revenue by an estimated 500 million shekels ($145.7 million) each year.

The new law brings Israel into line with other countries that have limited cash transactions to prevent money laundering. It includes a ban on all cash transactions over 11,000 NIS (approximately $300) for any kind of purchase.

The new reporting obligation on real estate purchasers compels them to report the sources of the finance with which they buy any kind of Israeli real estate, whether domestic or commercial. It applies equally to investors and to home owners purchasing any size of property. They must complete an online form on the Israel Tax Authority website within 6 months of signing a purchase contract, and upload adequate documentation to prove the provenance of the funds. Failure to report their financial resources will incur a fine.

Foreign investors are already required to report on the source of their financing when purchasing property in Israel, so this additional obligation being imposed on all purchasers should not unduly inconvenience overseas buyers.

As a qualified Israeli lawyer and realtor, Shaun Isaacson, CEO of  Creative Estates Israel, is happy to advise on this new law and all other aspects of your Israel property purchase.