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, we recognize the dangers of using bar heaters, which can easily catch fire, so we make sure that tenants are using safe radiators and making optimum 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. Some ceiling fans have a reverse direction function, which can help to drive warm air back down from the ceiling to the floor.

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 being 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 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.

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

Turning Empty Apartments into Assets

Susan’s mother owns an apartment in Israel that she hasn’t visited in three years. Susan keeps an eye on it and pays all the bills, but it’s becoming a headache. Who knew that an empty apartment would still need so much maintenance! Susan has taken care of a burst pipe that happened in the winter and the upstairs neighbor’s kiddie pool leaking through the ceiling in the summer!

“We really don’t want to sell it, but we want someone to take over the hassle of managing it. If it could be rented out and generate an income, my mother wouldn’t complain! She would probably gift the money to her grandchildren!”, says Susan with a smile.

Updating Empty Apartments

Susan spoke to Creative Estates several months ago and we put together a proposal for her. We visited her mother’s apartment and gave her a list of problems that needed attention. Even if they got through another winter without a serious flood, it was clear that the seals on the doors to the mirpesset (balcony) were cracking and would need replacing soon. Dripping faucets were contributing to higher water bills, and the ceilings showed signs of water damage and neglect. Investing money in the apartment would only make sense for Susan’s family if they could recover the money.

The second section of our proposal included a costed plan for fixing up the empty apartment, upgrading the bathrooms, painting and decorating the rooms, and making it more attractive for renters. We showed her that the costs of this “shiputz” could be recovered by rental income in under two years. That would give them a window of time to decide whether to sell the apartment or keep it in the family.

Turning Liabilities into Assets

Susan gave the matter some thought and discussed it with her mother and brother in the U.S. “I always thought about my mother’s apartment as a liability rather than an asset. It was a headache to check on it every month, particularly during COVID when my parents were unable to visit Israel. Since my father passed, my mother lost her enthusiasm for visiting Israel, and we can probably put her up in our home more easily these days anyway”, she said.

With real estate prices rising steadily and high demand for rental properties in many cities, landlords today can earn good income by renting out empty apartments that are rarely used. Since many owners have jumped onto the AirBNB bandwagon – particularly in Jerusalem, Tel Aviv and all over Central Israel  –  thousands of long-term rental properties have been taken off the market. Rental incomes are high, and overseas owners can earn up to 60,000 NIS approximately per year without incurring income tax.

No-Obligation Consultation

Shaun Isaacson explains: “Investing in your real estate in Israel always makes sense. We see apartments that have suffered from lack of attention over the years, but it costs surprisingly little to update and upgrade them to suit long-term tenants. Because we have a team of builders, plumbers, electricians and painters who maintain our property portfolio, we charge less than most Israeli contractors. It’s in our interest to do a good job because we will be fielding complaints from tenants if we do not!”

If you have an empty apartment in your family that could use a little love and generate a little money, contact Creative Estates for a no-obligation consultation.”

Record Returns on Israeli Real Estate Investment in 2021

2021 was far from a normal year for anyone, with interesting new patterns in real estate returns on investment across Israel. Surprising trends in rental returns and property prices in different cities created some interesting anomalies in the profits that Israel property investors earned last year.

The Central Bureau of Statistics report on housing prices and rents in Israel’s 15 largest cities, and the results make fascinating reading. They reflect the returns on real estate investment by measuring two components: the rise in value of the property, and the rents received. They also take into account the transfer tax due on the profit when properties are sold, and the exemption from income tax on rents up to NIS 5,196 per month, which influences how much landlords charge. The national average profit for Israel real estate was 3% returns on rents and an 8% rise in the value of the property, yielding a cumulative return on investment of 11% during 2021.

The Rush to Buy

The fourth quarter of 2021 was the craziest quarter in Israel’s history for home purchases, with a record 42,000 transactions. Investors rushed to buy properties before the tax increase on investment properties took effect, and other home buyers also jumped to complete their transactions.

Rishon LeZion, Ashdod, Kfar Saba, Haifa, Ramat Gan, Rehovot, Haifa, Jerusalem, Netanya and Rehovot all saw a steep increase in real estate prices. However, the trend was most pronounced in Tel Aviv – the city in which the largest number of new homes were bought in 2021, and where average prices rose by 30%. This micro-economy is disproportionately influenced by the technology company exits, IPOs, and high salaries in the technology sector. Many of these ‘unicorn investors’ have been buying up prestige apartments in the city center, where the supply is small and demand can inflate prices very quickly.

Lower Rental Returns

The absence of tourists in 2020 and 2021 led many property owners in holiday destinations to switch from short-term holiday lets to longer term rental contracts, which impacted the supply of homes. This probably contributed to the reduction in rental prices in some cities, particularly Tel Aviv and Jerusalem. For example, apartments in Tel Aviv – from small 1-room apartments to larger 4-room homes – earned rental returns for their owners of just 2.5% in 2021.

Despite lower rental returns, Tel Aviv investors who sold their properties in 2021 received the highest rate of return of any city in Israel. In the year to December 2021, the average price of a 3-room apartment in Tel Aviv jumped in value by 25%, from NIS 2.28 million to NIS 3.36 million. Real estate investors in the White City saw combined returns (based on the increase in value and the reduced rental returns) of between 22% and 28%, depending on the size and location of their property.

Southern Comfort

Surprisingly, the best rental returns in the country were earned in Beer Sheva, where a 1-2 room apartment purchased for NIS 570,000 at the end of 2020 generated rental returns of 4.3%. However, owners may have to hold on to these apartments for a few more years in order to receive a good rate of return, because their value fell by 2% during 2021.

For overall returns, Ashkelon topped the table, with a 4.2% rental return and an average price rise of 20% during 2022 for small apartments. Larger apartments in Haifa and Kfar Saba also performed well – the average five-room apartment in Haifa cost NIS 1.86 million at the end of 2020, and increased in value to NIS 2.15 million at the end of 2021. In Kfar Saba a similar apartment rose in value from NIS 2.7 million to NIS 3.1 million over the same period. Rental returns during 2021 averaged 3% in Haifa and 2.6% in Kfar Saba.

Looking Ahead

The increased purchase tax for property investors that took effect in November 2021 has depressed demand, and rental prices are continuing to fall in 2022. We look forward to the return of tourism and continued interest from families who are considering making Aliyah. The expected rise in interest rates will make mortgages more expensive, but this may strengthen the rental market as potential local purchasers decide to continue to rent. All these facts make it all the more important for real estate investors to hire skilled property managers to help them maximize the returns on their investment through careful stewardship.

If you own a property in Israel and would like to see if it could earn you better returns on your investment in 2022 and beyond, book a no-commitment confidential conversation with Shaun Isaacson, CEO of Creative Estates Israel.

8 Reasons to Invest in Israeli Real Estate in the New Year

In an uncertain world, Israeli real estate remains one of the most reliable and profitable investments that you can make. Here are just 8 of the financial arguments for investing your money in Israel during the coming year – leaving aside the many emotional and personal reasons that people choose to own a home in the Jewish State.

  1. Israel’s housing prices have risen more than 5% every year for the past 20 years, with even higher rates of increase in Israel’s populous and popular central region. This rate of increase shows no sign of slowing and is great news for investors.
  2. Demand continues to outstrip supply in the Israeli real estate market, largely due to the slow bureaucratic approval of building permits. Successive governments have failed to address this problem.
  3. Strong Aliyah trends and other demographic factors are expected to keep the demand for housing high in the coming years.
  4. 35% of Israelis rent their homes, and rental apartments are in short supply and expensive, especially in the most popular central region.
  5. The profitable return on Israeli real estate investment comes partly from rental income, and partly from the sale of your property.  You can typically achieve 25% return on investment in 3 to 4 years.
  6. Israel’s new government has announced plans to rezone downtown office buildings and commercial spaces for conversion into residential units. This will create small apartments in city centers, which will be easy and profitable to rent. 
  7. The Tel Aviv municipality is investing 100m NIS in renovating and upgrading apartment buildings, increasing their value. Similar to the now-defunct Tama-38 program, investors can benefit hugely if a property they own qualifies for improvement. Details here.
  8. The long-term real estate rental market in Israel is steady and profitable, especially when your investment property is managed by property management experts. From finding quality tenants to ensuring that your property is well maintained, the Creative Estates property management team will protect your investment as if it were our own.

Shaun Isaacson is CEO of Creative Estates Israel, a qualified realtor, lawyer and MBA. Find out more about his company’s investment and property management expertise at www.CEIsrael.com

Spotlight on Hod HaSharon

One of Israel’s best kept secrets, Hod HaSharon is a sought-after place to live with a highly educated population and attractive facilities.

Hod HaSharon means ‘glory of the Sharon’, referring to the central part of Israel between Herzliya, Ra’anana and Petach Tikva. It was established in 1964 to unite four agricultural towns, and it became a city in 1990. It still has agricultural land and green spaces, but intensive building projects in recent years have expanded the city and increased its population to 65,000 residents.

Israel’s Central Bureau of Statistics publishes an annual socio-economic index listing the best places to live in Israel, and Hod HaSharon is ranked highly according to their criteria. These include the residents’ average monthly salary, the quality of the local schools, and the percentage of students who matriculate (85%) and who participate in youth activities (50%). This attracts Israeli families who are looking to raise their children in a positive environment. For real estate investors, these ratings also attract ideal long-term tenants!

As a relatively new city, Hod HaSharon has been carefully planned with beautifully landscaped parks and walkways. (You can explore this for yourself by watching this video on YouTube of someone walking silently around Hod Hasharon for over an hour; it has attracted 63,000 viewers in 6 months! The city is known for its great selection of indoor shopping centers with excellent facilities for all ages.

Among Hod HaSharon’s famous sons and daughters are Eurovision star Netta Barzilai, supermodel Bar Rafaeli, award-winning actress Shira Haas (“Unorthodox”) and a slew of Israeli footballers, tennis players and swimmers.

The real reason for Hod Hasharon’s popularity is that traditional real estate magnet: location, location, location. Its proximity to Tel Aviv, Ramat Gan, Givatayim and Petach Tivka puts Hod HaSharon right at the heart of Israel’s start-up economy, with endless employment opportunities. It is also well-connected to Israel’s rail network with two stations, one in the north and one in the south of the city. This means that it has all the advantages of being part of the Tel Aviv metropolis, including convenient routes to Israel’s best entertainment venues and beaches, but with a more suburban feel and access to open spaces, such as the Hod HaSharon Lake and Park shown above.

Creative Estates Israel manages a number of rental properties for overseas investors in Hod HaSharon. These apartments typically generate a solid 3% return on investment, but will probably sell for much more than their purchase price, because Hod HaSharon is becoming a more popular place to live every year.

Shaun Isaacson from Creative Estates Israel would be happy to speak with you about real estate investment opportunities in Hod HaSharon and in the other cities and suburbs of the Sharon region of Israel. Contact us for a free no-obligation conversation.