Real Estate Investment Tips
You’ve decided that you want to get on the real estate market’s fast-paced train and become an investor. The decision to invest is an excellent one and is always better than doing nothing with your money. And if you’ve checked and decided that in terms of character and capital, the real estate market is the right investment for you, great! Investing in this market in Israel is considered excellent, at least according to data from the last decade, and if you also consider the unique data of the local real estate market, it will probably continue to be so in the coming decades. But before we take our first steps, we must make sure that we have acquired the basic education and understanding of how this market works and what the general do’s and don’ts are.
We have summarized for you in five steps everything a beginning investor who wants to purchase their first or even second property for investment purposes needs to know.
Step One – Financial Capabilities
Long before we look for an investment property and even before we sit down to formulate our investment strategy, we need to know what our financial capabilities are, that is, what we are coming to the market with. Our financial capabilities consist of existing capital and the ability to raise additional capital. Existing capital can be in the form of cash in a checking account, education funds, deposits, securities, and the like. We must sit down and compile a table as accurate as possible of all the resources available to us that constitute initial equity on which we will build the balance of our value. The second step in this process is to examine the ability to raise additional capital. A first option is to take out a mortgage, if it is on our existing property, if any. And at this point, it is important to know that even after the entry into force of the latest update prohibiting mortgages on existing property for the benefit of investments, this is still possible, both through banks and through non-banking entities. In order to obtain an accurate and professional picture, the most recommended thing is to use the help of a professional mortgage advisor who can maximize both the loan terms and give you an accurate picture of the capital available to you from this channel. Additional options for raising capital are through loans on the account of our pension and education funds, which are provided under excellent conditions. So after we have conducted this examination and we know what With the amount of money available to us to purchase a property, we can move on to the next stage, which is planning the form of investment.
Step Two – Formulating an Investment Strategy
The field of real estate investments includes a variety and a whole world of options that are suitable for different people in different ways. We must formulate a method of action that suits us according to our familiarity with our specific abilities and of course our needs and expectations from the investment. For example, we must decide whether we want to purchase a neglected apartment and renovate it before we rent it out or perhaps even sell it in a relatively quick turnaround, or whether we are less suited to this type of headache and prefer a property that is already ready as is for rental. We must decide on the investment period – short, medium or long term. This decision has a lot to do with the rest of the journey and the type of property we purchase. For example, a long-term investment can direct us to purchase a property in an area designated for urban renewal.
Step Three – Deciding on a Suitable Area for Investment
The blanket recommendation you will receive from any real estate investment guru is to focus on a specific area. Deciding on a suitable area for investment should be based on at least two considerations. The first is an area that is suitable for the amount of capital available to us. The second is related to our ability to manage the property. If we move very easily and distance is not a consideration for us, then we can spread out over many areas. However, if our lifestyle is very stressful and we are interested in maximum ease of managing the property, we will have to choose an area that is relatively close to us.
Step Four – Finding a Suitable Property and Performing All Necessary Inspections
Good, quality real estate investments require in-depth market research in order to find the right property. It would be a mistake to see an apartment or two and immediately rush to close. We must carefully examine the selected area, study it, understand what is happening there, study the prices prevailing there, both in the sale and rental markets. Study the target audience for whom we will rent or sell in the future. Understand what plans are intended for this area, whether there are any future development plans. Is a light rail going to pass through this area in the future, and more. We must conduct research that will give us a comprehensive picture of the future of the area in which we will purchase our property. Also, if we have located a property after in-depth research, it is important that we visit it several times during different hours in order to study what is happening around it in depth.
Step Five – Negotiating, Purchasing, Improving and Renting
The last and very important step towards purchasing is negotiating. We must arrive at it when we are equipped with all the supporting facts. Be very calm and also ready to withdraw from the deal and not overly enthusiastic and of course use the services of a good and preferably local attorney who will conduct all the appropriate legal checks regarding the property for us in order to ensure that we do not enter into a problematic transaction.
You have managed to summarize all the details regarding the price, you have done all the checks and signed a contract. Great, it is time to implement the strategy you have chosen regarding possible improvements and sale or rental.
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