Israel property investors can take advantage of today’s low interest rates to expand their Israel real estate portfolios by leveraging their existing assets.
One of our clients owns a property in Israel that is now worth 1.7 million NIS – approximately 30% more than when it was purchased 5 years ago. They wanted to buy an additional apartment in Israel for one of their children without having to sell their investment property, which is earning good rental income, and without having to invest much money.
Based on their existing equity, they raised a 50% mortgage on their current property, enabling them to buy a new-build apartment for 1.7 million NIS in Netanya, which is a fast-growing city with extensive new development underway.
In Israel, rental incomes of up to 4,900 NIS per month can be earned tax-free, and the proceeds used to make monthly mortgage payments. This means that the investor who can fund his purchase by releasing equity from existing properties only has to find sufficient money to cover the costs of the purchase, namely the agents’ and lawyers’ fees and purchase tax.
We recommended to our client that the apartment be registered in the name of their child, in order to reduce their tax liability. This is standard practice in Israel, where wealthy families often buy new apartments in up-and-coming neighbourhoods for each of their children, but it is only possible for Israeli residents.
Because of the way that Israel’s towns and cities are expanded, real estate developers often offer individuals and groups of investors excellent opportunities to buy homes “off-plan” before a new suburb has been built. Over the next few years, as the properties and infrastructure are built and families start to move into the new area, facilities such as health clinics, food stores and kindergartens will be opened, trees and parks planted, and Israel‘s public transport companies will add new bus routes to connect the new streets to the neighbouring suburbs and towns.
Approximately 5 years after the first homes were purchased in a not-yet-existent neighbourhood, their resale value will have almost doubled and their rental value will have risen dramatically. During the early stage of the project, these new properties may have been rented to young singles or couples who do not mind living in a new area with basic facilities.
Creative Estates Israel can help non-Israeli investors to get involved in these same exciting real estate investment opportunities. We are in touch with property developers and aware of many new projects that are being planned and are open for investment. Please contact us to find out more by emailing shaun@CEIsrael.com.