It is said that “the easiest way to get a point across in a way that will sink in is to use a story.” So, this week, let me share three stories related to real estate in Israel.
An investor who owns three investment apartments came to my office to talk to me about taking over the management of his units. Some probing questions brought to light the fact that he was undercharging on the rents. We were able to bump up the rental income by almost $11,000 a year almost immediately!
Lesson: You might be leaving money on the table. When’s the last time you checked your income vs. what the market is charging for a similar rental?
Next story: Just Yesterday, I met an attorney to discuss an apartments for which I am the buyer’s broker and expert representative.
I had gone to personally inspect the apartment several days earlier. During the discussions with the lawyer I realized that part of the “grand metziah” of this dira was the seller attempting to sell crevice in the hill behind the property… which wasn’t his! This “find” was the reason for the seller asking for 500,000 shekel more than a similar apartment. Now, if it would have been “halachically” if not legally been useable by the buyer, based on access rights then it might have still been a good deal.
However, in this case, there were other neighbors with an equally valid chance to claim access rights and equal access. This awareness changed the spin from the property being a wonderful bargain to being a sour, overpriced investment.
Lesson: Especially in Israel, everyone wants a “unique twist” when they buy property to show how smart they are and that they got the best deal. Sometimes it’s buying an apartment with a storage area (machsan) that can be used to expand the apartment size in the future, roof rights, or a garden that has private access, which makes the apartment more valuable. Being eagle eyed and careful can help you get the right deal that works for you without getting burnt.
Next story: A client contracts with us to renovate a property near Shaarei Chesed to split it into several short term rental units. Being that the property is located at the foot of a hill (somewhat similar to the story above, except here he was the only one with access) we understood that we could dig into the side of the hill to create more area and bigger units.
The contractor quoted a seemingly fair price of 400,000 NIS for the digging and removal of the rock and debris. But did we pay it because it was the best price from the several contractors we knew and trust? No!
Instead, we first dug a hole in the rock and inspected it, to see what the debris consisted of. To the excitement of the owner, we discovered that it was simply large boulders that would have to be transported elsewhere, but not anywhere near as many stones or dirt as anticipated. And so were able to get the price reduced by 210,000 to just 190,000. Music to the owner’s ears!
Lesson: you can overpay even when you pay an honest wage. Take extra steps to safely minimize your expenses where you can.
And finally, there’s a not-so-funny joke in Israel that goes something like this:
A customer at a restaurant eats a sandwich and has a drink. When he asks for his bill, he discovers a 30 shekels charge for something called “matzliach.” He doesn’t recall ordering anything like that and so, calls for the waiter. “Excuse me, sir… I ordered a sandwich and a drink. But what is this extra item on the bill?” he asks. The waiter shrugged and said. “You can remove that charge from you bill. Sometimes its matzliach and sometimes it’s not.”
Like an American going to court in China without an attorney or speaking Chinese, when you work in a country with different laws and culture, sometimes people get taken advantage of.
No matter how good a deal sounds, you should seek counsel before you sign anything or put down any money.
During these last eight years of my experience managing, brokering, and renovating different properties and dealing with brokers, attorneys, government agencies, and contractors, I’ve seen more mistakes then many people see in a lifetime.
Especially those who already have apartments in Israel but want the additional income that renting it out for the short term provides, it is imperative that you do it right, and not “chap-plop.” When done right, with Hashem’s help, you can continue to enjoy its use when you are here, while leasing it when you are away- while keeping your investment and Jerusalem home in pristine condition.
Shia Getter is the CEO of the Shia Getter Group, a full-range real estate services firm in Jerusalem catering to the Anglo-Charedi Community. He is a noted expert, columnist, and author of Everything You Need to Know about Buying Real Estate in Israel (Feldheim 2014). He and his professional team are Israel’s one and only true seller’s and buyer’s brokerage. They provide a unique service by managing and maintaining your apartment and being completely responsible for the entire buying or selling process.
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