Q&A
Answer: Many mistakes are born of inexperience. The most basic mistake is looking for an investment without defining a target. The first step in avoiding this mistake is understanding what the objective is. An additional monthly income? Pension savings? Savings funds?
The aim of making money fast with minimal risk is not a real objective. The definition of the objective will lead you to ask the right questions.
Answer: Yield is not the main index for a better investment – an investment with high yields might be a riskier one. Therefore, the main reason for selecting an investment is the investor’s character and preferred risk level. It is important to note that guaranteed yields are an unfounded concept. It usually happens when the property is worth less. There’s no magic in investments. The world of guaranteed yields attracts inexperienced investors.
Answer: Every real estate investment requires an in-depth macro to micro examination, including the economic data going from the country, to the city, neighborhood and specific street where the property is located. This examination must be conducted in a thorough and meticulous manner in order to obtain a full picture and ensure transaction advisability and success.
Answer: When investing in real estate overseas, it is important to work with the right professionals. We believe in supervised acquisitions, including accompaniment by a trusted lawyer in Israel, Bank Leumi – which provides trust accounts, a CPA specializing in U.S. tax issues and a title company that, together, create a purchasing array that completely protects your investment.
Answer: Limited Liability Company . There are no such companies in Israel. An LLC is a hybrid between a limited company and an unregistered partnership, enjoying the benefits of both. On the other hand, LLC members enjoy legal protection as if it was a limited company while, on tax issues, each of the group members is taxed only for his profits, just like in an unregistered partnership, with no companies tax and tax on dividends. In practice, LLC member liability is limited only to the amount invested, thus their risk is limited.
Answer: Unlike the apartment rental market in Israel, the U.S. imposes many more expenses – municipal property taxes that the apartment owner must pay, structural insurance is more expensive than it is in Israel, a local management company whose fees range between 8-10% of the rent and an extra 15% that should be considered in case the property is vacant and/or if there are maintenance expenses. Despite all of these expenses, there is still a high potential for profit, depending on the type of property, the initial purchasing price and the quality of the tenant.
Answer: A title company is licensed – both by the specific state and by the federal government – to transfer property rights. When purchasing a property, the title company execute the process and conducts a comprehensive review of the property and seller. Once the transaction is found to be in order, the title company will handle the transfer of funds and the transfer of rights to the property.
Answer: Group investments exist mainly abroad (mostly in the U.S.). A group investment leads to greater risk distribution. In other words, a lower risk and stabler investment.
Answer: An investment fund is a group investment offering several investment options – you can decide to commit to one project or several (similar to the capital market). Several investors join forces on one investment under a dedicated legal entity (LLC/LP) established by the fund.
Answer: Many investors want to spread their risk – they can do that mainly when they believe in the company. The investment can be divided among various markets. Every fund has a trustee (lawyer). A quarterly report is issued to the investors, describing the fund’s overall performance. At the end of the year, they report to the tax authorities (external auditing). Companies that manage the properties share the same interests.
Answer: Multi Family is a condominium of rental apartments consisting of one or several buildings. The complex is owned by a single owner. It is very popular in the U.S., less in Israel. Tenants in such projects enjoy the benefits of a rental property (a type of community with residential complex advantages like a swimming pool or gym). The American culture is very different than the culture in Israel, therefore it is more popular in the U.S. – relocating according to the workplace and the large rental market. There are several levels in a multi family investment based on the construction year, the amenities offered and the location. There is a shortage of new complexes of this kind among the middle class.
