With so many property developers advertising great deals on apartments all over Israel and a network of friends to help you, why would you use an Israeli managing agent to help you manage your Israeli property?
Why Use a Managing Agent?
I am frequently asked by property purchasers about the costs and benefits of hiring a managing agent, and how much they should expect to pay. They often tell me that they have a local friend who is willing to manage their property, but I warn them to make sure their friend knows what they are taking on – it is often more complex and time-consuming that they realize.
1) Advertising the property to find tenants
2) Showing the property to potential tenants (by arrangement with existing tenants)
3) Vetting potential tenants, including checking references and credit-worthiness
4) Negotiating the terms of the lease
5) Organizing rental payments and security deposit
6) Checking the property before tenants leave & supervising painting & repairs
7) Meter-readings for utility bills and settling with departing tenants
8) On-going liaison with Va’ad Bayit (building committee) and neighbours
9) Collecting rent and making sure Arnona (property tax) and utilities are paid
10) Arranging & paying for the property insurance policy
11) Banking, book-keeping and income tax payments
12) On-going inspection and maintenance of the property and appliances
13) Emergency repairs in response to calls from the tenants
It is important that your property manager has a good team of reliable tradesmen who can be trusted to give competitive price quotes and to come when called, particularly in an emergency. Good maintenance people are often surprisingly difficult to get hold of, particularly at the start of a season when everyone wants their roof repaired or their air-conditioning or heating fixed at the same time!
Choosing a Good Managing Agent
Make sure that your managing agent is not a recent immigrant who is trying to make money by running a few properties. Find someone who knows how Israeli buildings are constructed, how the electricity and plumbing works, and how to get things done! If they are not savvy Hebrew-speakers, they are unlikely to get you good deals from reliable tradesmen or the best rental price from tenants, or have the experience to recognise and pre-empt problems before they arise.
Many overseas property purchasers find themselves reliant on the real estate agent who helped them to purchase their property, who then offers to manage it for them or recommends a friend to do so. This may mean that you are not getting the best deal on management fees. It pays to be a savvy investor and check that your managing agent is doing what is necessary and not overcharging you.
Property Management Costs and Benefits
We advise our clients to budget for 10% of their rental income to cover management fees, and more if they want their property managed as a holiday home or with short-term tenancies. It’s a small price to pay to protect your investment and ensure that your property is well-managed. Good management is most obviously cost-effective when it ensures a smooth handover, so that you do not lose a month’s rent between tenancies.
Careful drafting of your lease and good maintenance practices can also prevent unexpected costs arising during a tenancy. Because we manage multiple properties, we can often find ways to reduce your expenses by negotiating good rates with maintenance engineers to carry out pre-season checks and other contingency planning.
Shaun Isaacson is a qualified Israeli lawyer, MBA, Real Estate Agent and an experienced property and investments manager, managing properties over the Sharon Region.