1. Divorce – moments when people don’t always want to exhaust the financial potential, but there are other interests and emotions that govern the event, they want to end the matter quickly even at the cost of a certain loss
   
2. Inherited apartments – not everything that was interesting to the father/mother as a business is interesting to the child who inherited the business, often there are those who want to get rid of the headache of managing many properties and simply go for partial and sometimes full sales of portfolios/buildings.
   
3. Pressure from a third party – debts accumulated for various reasons
   
4. Sudden death – and a desire to change one’s living area for emotional reasons
   
5. Lack of awareness – the owner of the property is not always aware of the value of the property in his hands
   
6. A permanent person/specific professional that requires a move – when there is a move to a living area that needs to be done quickly and failure to manage an orderly sales process and a need to cut off contact in a short time.
   
7. Difficult condition of the property – and the professional inability of the owner to manage its rehabilitation
   
8. Difficult situation of property management – and exhaustion of the owner from dealing with his management company
   
9. Property registration errors – a building that is not properly registered, a presentation in the area that does not match the registration in the tabu, which requires additional expenses beyond what is visible to the eye
   
10. Housing improvement – commitment to purchase an apartment or move and failure in the planned sale process for the existing property

הפוסט Why would a property sell below market price? הופיע לראשונה ב-JBS.

1. Fixed-stable income.
   
2. Tax benefits – for example depreciation, what does this mean?
   This means that you give the known expense and calculate it as part of the expenses, and thus the tax is not on the total income but on the income minus the expense, of course there are more precise details in this, but this is another focal point that reduces taxation
   
3. The increase in value and in light of this the increase in the value of our equity-
   It is true that it will not always be accurate at a specific point in time, but when you make smart investments over time, real estate increases.
   And so is the value of our property. Refers to D which is in our lead and A which is the development of the area at a discount and we purchased correctly
   
4. Leverage, the ability to take out a mortgage and leverage the mortgage ,
   And so not only make a return on the investment but also on the accumulated capital and thus increase our net profit
   

הפוסט What is the power of yielding real estate as an engine to accelerate economic independence הופיע לראשונה ב-JBS.

2. The language barrier: You should invest in a country that does not speak and read its language reasonably well.
   If your English is at a reasonable level – in countries that speak this language such as the USA.
   If you don’t speak Spanish – invest in Spain. Why?
   How will you perform due diligence on the deal if you don’t know the language? You can only rely on translated material presented to you by the broker, developer or seller. You will not be able to check raw material, for example similar property prices.
   

3. Acquaintance with the local tax system: a local body, an expert, with many years of experience, well versed in the taxation system, not only at the state level but in every region and sub-region. For example: high taxation on schools in specific areas of the city – which you could not know to check in advance, can make an investment worthwhile in terms of your cash flow.
   

4. Acquaintance with the local system and laws: the same for the local law: the consequences are in the line of profit, starting with how long and what the process is for evicting a non-paying tenant, to the laws regarding the height of grass allowed in the yard (literally). Invest only with an expert, professional body with years of experience, who knows the area and controls all your transaction and investment data.
   

5. Intermediary: Intermediaries are broadly divided into two. Most of the brokers deal with homeowners, that is, those who sell or buy a property for residence and not for investment. Intermediaries of this type are not suitable for you the investor, will not benefit you and will even cause damages. You need to look for the second type of broker – a broker who specializes in working with investors and in the specific market in which you have chosen to invest.
   

6. The management company: The management company and you have a distinct conflict of interests. The management company does not make a profit from a monthly collection of NIS for you, but from maintenance work it performs on the property and charges a hidden or overt fee for it and changes tenants, for which it charges a tenant finding fee of half a month or a full month of NIS.
   Therefore, the management company wants maximum tenant turnover at least every year and a lot of maintenance work, while you, the investor, want the opposite – long-term tenants and maintenance costs as low as possible.
   

7. Avoid short-term investments :
   In the transaction of improving a property and selling it in a short period of several months, you can earn tens of percent on the investment. The temptation to make a quick profit carries high risks, including losing part or all of the fund. Especially as an investor in property overseas, I strongly recommend you not to go in the direction of short-term investments.
   

8. Choosing an investment area: The investment area you choose must include the following parameters:
   – A medium or large city in the USA (at least 100,000 inhabitants) or one of its suburbs that are not more than an hour and a half away from a significant city
   – The percentage of houses that are empty is low (you can get this data online as well as from the local broker)
   – The property rental time – low – up to 30 days for rent.
   – There are high rental yields in the market. What is high yield? In today’s market, a return of 7 to 8 percent is considered high.
   Pay attention – be very careful of areas of the city where the returns are in double digits. In most cases, the reason for this is that these are the worst areas for living in that city, so this investment is risky and the high returns will remain only on paper
   – In the market, there are stocks of houses for sale at prices lower than $100,000 in reasonable areas in terms of the level of schools and the level of crime.
   
   
9. Property ownership registration:
   When you purchase a property not directly from the seller, but through a marketing company or an entrepreneurial company, think to understand to the end that the property is registered in your name or in the name of a company that owns the property directly and in which you have ownership.
   Unfortunately, we have often encountered investors who thought they had purchased a property but the transfer of ownership was not carried out as required and the property is not registered in their name or in the name of a company they own. That’s why section #1 is so important – knowing the language
   
   
10. Know what the market price of the property is before the purchase: without this figure it is forbidden to purchase any property either abroad or in Israel.
    In order to know what the value of the property is, you must have a list of at least 3 similar properties that were sold in the same neighborhood in the last six months, where the price must weigh the larger of the property. If it is a residential building then its price is also determined according to the average yields in the market where you are purchasing.
    You must use an expert in the field and fully understand the data he gives you and even cross-check with another source independent of the transaction.
    
    A well-known saying in real estate is that the money in real estate is made by buying and not selling – this is a very true saying. In other words, purchasing at the right price is the key to success in any real estate transaction – this is probably the most important section in real estate investments.
    Another important point – if you buy real estate with an emphasis on the USA, then a cash purchase, that is, without leverage, usually enables a purchase at a significant discount. This is an excellent technique to reduce the purchase cost and create a profit on paper from the purchase already at the time of purchase. This is a technique that we make sure to use a lot when after the cash purchase you can get a mortgage loan from the bank and this money goes directly into your bank account (CASH OUT)
    
    
11. Insurance of the property:
    Immediately upon purchasing the property, you must insure it with full insurance that will cover light and heavy damages such as fire or weather damage. More than once I made a lot of money from an insurance case and once when an old property that I owned burned down almost completely I won full financing from the insurance company and the construction of a new house whose value was much higher than the house that burned.
    
    
12. And finally: purchase through a company marketed in Israel:

It is very important to find out whether the company that offers you to purchase the property is a marketing company or the entrepreneurial company itself. In most cases, companies in Israel that offer properties abroad are marketing companies only, the relationship between them and the property is low, the commissions are high, and the familiarity of the salespeople with the area and the property is low to almost non-existent.
It is recommended to go directly to the source and purchase with the developer directly or from a local real estate broker.
Real estate is done exclusively in the field.

הפוסט 12 winning tips for investing overseas הופיע לראשונה ב-JBS.

The girl had already made a decision to enter and invest, but then she told us about all the objections and warnings that the family “advised” her about entering into investments…
How risky is it to invest?
how charlatans they all are,
How is she going to lose the money.. etc. etc.

So true! There are disappointments and falls.
We also experienced it all.

After all, we also invest in ourselves and have accompanied hundreds of investors in recent years.
We know what it’s like. You know the fear.
We too have experienced successes, we have experienced disappointments and we have suffered burns.
We know exactly how that feels.
Therefore, our rule for those interested in investing is this:

“The intensity of the pain of losing a significant amount that you will have
It is much stronger than the intensity of the pleasure of earning twice as much”

and what does that mean?

that before you enter the investment, you must know with your eyes open 3 parameters:

1. What is your investment strategy?

2. What are the chances – as well as – what are the risks?

3. Understand reality as it is (neither become too beautiful nor too bad)

And what is the great news?

that if you know what you are doing, you can build passive income that will grow over time, until the point of departure for financial freedom (yes, you can expect it in advance).

and all this –
without taking unnecessary risks,
without trying to “time” the market,
without taking care of tenants and all the headache,
And without looking for the get-rich-quick “bonanza” investment.

All you need is exactly the 3 parameters from above:

1. Know what your investment strategy is

2. Know the risks versus the chances

3. And to know the current reality as it is

All this can be known at the level of the numbers and build a plan going forward, all that is needed is to sit down once and spread the data on the table.

How do you beware of charlatans and amateurs in real estate transactions abroad?

Types of investments:

Investments have 3 basic elements: security, yield, and liquidity.
We must give up one of them.

We believe in lifetime cash flow income from real estate investments:
In cash flow transactions in properties that are purchased well below market value (without expenses and hidden fees and surprises) and that have a healthy improvement element.
And here is the best mix between returns and risk:
Class C properties in areas B or C but very specific.

What not to go for?

Never go to Class D assets even if there is a potential return of 40% per year – don’t touch it, and don’t even consider it.
I won’t even explain why. just no.

dispersion:

Scattering, scattering and once more scattering.
Don’t buy a single remote control home.
Scattering helps not to lose money.
In a single transaction for one asset – there is risk.
In a portfolio of yielding assets, a single failure in one asset invalidates sixty.

In addition, there is a low correlation to the risky capital market and we see it even more strongly this year.

Revenue distribution:

Rule of thumb: the profits between real estate investments should be divided between rental income and capital gains.
Both should “sit” on an excellent deal, already in the purchase.
The first has control – the second is selective.
Make sure that the part of the rent generates a stable and regular income.
That’s why you are investing in the US.
This is what contributes to a better night’s sleep.

Make sure you are in an area with very good employment and income data.
These are your tenants who work in these places.

As for the exit part, no one has a crystal ball – therefore, make sure you enter the transaction below its market value and in demand areas.
It’s not just that we are in the business of cash flow investments, even when the land value of the field changes – the tree will continue to bear fruit (rent).

And here is the most important:
If there is anything you will take from this article?
This is what it says from here:

How do you choose an investment manager or an entrepreneurial company?

There is a situation that some of you will say that I am not objective, true. admits guilt.
But I say these things on the assumption that you who are reading these lines are in a dilemma as to what and with whom, so it is important for me to say clearly:

Large companies that are not the local entrepreneur, they are not real estate companies but marketing companies,

There is a huge difference, an investor once told us that his fingers are already “burning” to invest, but his wife is pushing for them to go with a big and well-known company.

The most obvious, isn’t it?

So I’ll keep it short and simply say:
Do not invest in large marketing companies that are not the local entrepreneur themselves.
Not because of matters of integrity, God forbid, and not because the investor is not important.

The investor is very important!

It has to fund 50 or 100 salaries, beautiful offices and the amazing presentations you get.
But that’s because of the model itself, it just doesn’t work.
The number of links in the investment chain between you, the investor, and the property, which require absolute control, as well as the number of potential points of failure between the investor and the transaction and the management company – is enormous!

And one more note:

In large marketing companies that are the “Middle Man”, the people who check and decide on the investment – they are not the people who will manage it for you.
Most of the time there won’t be those in communication with you either, you won’t even know who they are.
The analysts in the plaid shirts and the marketers in the button-down shirts who sell and manage the investment – have never visited the property, some of them have not even been to the US!

Just like learning to swim by correspondence.

And add to that the turnover of employees (employees) in these companies, who today are here and tomorrow they are in another company, without any personal commitment to you.

How can it be??

Well, the model of large companies, which are amazing companies for marketing, but they are not the local entrepreneur in the field – the one who knows every bump in every property in the project, unfortunately is a model that has proven its failure, and it makes a lot of sense to understand why – believe us, we were there, with the shirts and buttons.. ..

But let’s go into more detail…

1. The difference between large companies and a real local entrepreneur

2. Choosing the right investment route for you

3. And what does the legendary investor Warren Buffett think about it?

If the company is in the hat of “supervising the entrepreneur” – then in reality it is not.
She actually mediates and is at odds with the investor on so many points,

And worst of all?
Just from the very structure of the commissions that some of them take, it will reflect by definition – a high investment amount in relation to the property’s value, that is, it will usually cause your investment unit to be higher than the real property’s value from the beginning –

Which is horrible investment mistake #1!

Our important advice: do not invest in a property according to market value or more.
Even 10% below the value, it’s like entering in the value if you take into account broker commissions in the purchase and sale.

You need to make sure that the total investment is significantly lower than the value of the property

Regarding prospectus:

‘A prospectus is security’ you say?
So a prospectus does not guarantee anything. You have nothing to be impressed by investing in the prospectus.
It costs hundreds of thousands of shekels, will you, the investors, finance it, and in return? He won’t promise you anything.

Nada

It’s better than a presentation, because you can tell fewer stories, but it doesn’t promise you anything.

The building in the USA, or the property portfolio, or the American economy, they are not so interested in the prospectus written by a law firm in Israel.

Therefore, the most important element above all is: who manages your investment.

Invest in choosing your managers, before you invest. There is nothing more important than that.
Indeed, it is not easy to find good investment managers.
However, when you find them, you will find that you have found the ones that suit you best.

Now let’s talk about choosing the best investment route for you

People think that construction properties are always risky and that you cannot lose money in multi-family properties.
This is not true!

It all depends almost on management.
Yes, ok, I hear you – and it’s true.
In real estate there are also things over which there is no control, right.
And there is also a higher power. No one said that real estate is money in the bank.
And yet, regarding what is controlled – everything is managed.

Bad management, even mediocre, can sometimes drain all the investment money.

Regarding the fees of the managing company:

Every entrepreneur and every company is entitled to commissions and profits as part of the syndication, that’s perfectly fine and fair.

You don’t want your entrepreneur not to make a profit.

but! And there is a great sadness:

The less the percentage of the fees the company charges depends on the success of the project, and is charged anyway – this creates a greater conflict of interest with you, the investor.
Therefore, note that the developer is in the deal with you also in the hat of an investor.

Remember:

It is better to invest with a good manager in a bad sector, than to invest with a bad manager in a good sector.

Investment managers who are also the entrepreneurs in the field are much better than institutional investment managers, who with all their titles and honors, and even the most talented ones, and some of them are our friends, today they work here – tomorrow somewhere else.

did you know

In US mutual funds, the rating of the fund manager is more important than the track record of the fund itself, which only makes sense.

In David Swanson’s book Portfolio Management
He showed a 17% difference in the annual return of good versus bad managers, on the same investment instruments.

And to finish:

You will always meet with the entrepreneurs themselves who are the people in the field and they are the ones who manage your investment.
Make sure they control the assets and the management company (critical).
After all the dry data and figures, make sure that they, the managers, the people, “go through with you” also on the level of gut and intuition, regardless of whether they are nice or not, and if something doesn’t sit well with you – listen to it.

And now for Warren Buffett’s advice:

We strongly agree with what he said about the qualities of investment managers:

“Look for integrity, intelligence and energy. If you don’t ensure the first – the other two will destroy you”

הפוסט How to find a golden deal in real estate הופיע לראשונה ב-JBS.

We have accompanied hundreds of investors to date and we bring a cumulative experience of over 20 years in real estate in the USA

We bring with us practical knowledge from the field and a very in-depth knowledge of real estate in the US.
We live and breathe the field every day.
Our track record is over 100 diverse and creative transactions, many of which are very large multifamily transactions.

2. Field work: high ability in locating properties below the market price

We control the field.
All the transactions we obtain will be significantly below the market price, so that we will always make a profit already in the purchase and increase the security of your fund as an investor.

3. We are not a marketing company, we are the actual entrepreneurs

This is perhaps one of the biggest differences – and not many know it.
There are marketing companies that can also bring you deals,
but! And this is the great grief – they are not really interested in the quality of the deal.
They are interested in the commission they receive from you.
What also means that you don’t pay directly to the developer
But you also have an intermediary in the middle who charges a fee.

With us – we are the actual entrepreneurs.

We locate the property for you, we map, we inspect,
We are in the field and do all the hard work for you.
You are dealing directly with us. Always.

4. Common interest: We invest together with you in the transaction

This means that you will not enter into a deal that we ourselves will not enter into.
Additionally, we will never “learn” about our investors.
This means that any investment we enter into will be in places we know and that we have already invested in before even without investors

Therefore, if we are partners and invest ourselves in the deal, then our interest in succeeding is very high. If the deal is not good – it is also not good for us.
And we will make sure it is very good.

5. Peace of mind: we manage the property for you

You don’t need to manage the property yourself, nor do you need to hire a management company to manage it.
are you investing So put your money to work and enjoy the return.
We are experts in managing the property and getting the most out of it.
Leave it to us. You will have peace of mind.

6. Truly passive income.

You have no daily contact with the property.
Apart from the initial plan built together and the quarterly updates, you will not find yourself interfering in the transaction or having to make one or another decision about it.

It will not be active income (which you will have to “work” for), but net passive income, when we take care of everything.

7. Transparency from day one!

Right from the initial meeting, you will understand that we are very professional in what we do – and also transparent in all our actions.
In all of our investments you will receive full information, they will send you quarterly reports, you will receive a detailed account status and you will have your finger on the pulse of the income from the conference in which you invested.
Beyond that, you will have direct access to us and can contact us at any time. Remember, we are invested together with you in the transaction. We will make it work!

8. We will never abandon a deal – we will always bring it to profitability.

Even if crises come, we undertake to manage our transactions until they are profitable.
So even if we cannot sell a deal, for example, at the time we wanted, we will continue to manage the joint property until it is profitable, and we will not charge you additional amounts for this.

9. Relationship: We are with you for the long term so that you reach your freedom.

Our goal in investments: to help you reach financial freedom in the fastest way and with the lowest possible risk.
We know what it’s like to live in financial freedom and we also know how to get you there. And if you stay with us, you will get there.
And of course – investing is not a sprint, it’s a marathon.

We have all been in business for many years and this is what we do on a daily basis.
As an investor, we expect and want a long-term and enjoyable joint relationship.

10. We came to do business – we came to enjoy!

Investments, entrepreneurship, financial freedom – these are fun things that are worth working for.
We are professionals and very serious about our investments, but we also really enjoy what we do – and we want you to enjoy it too.

As our investor, it is important to us that you feel good, that you feel safe, that you enjoy your investment and that it allows you to really grow. Both on a personal and financial level.
For us, financial freedom allows a completely different lifestyle. We want it for you too.

These are our ’10 commandments’ for investments and accompanying investors. We will always stick to them, they are part of our DNA at JBS and this is how we ourselves act as entrepreneurs every day

הפוסט Our “10 commandments” in investments הופיע לראשונה ב-JBS.

They spent so much time and effort making a purchase, some of them manage the property themselves, so this is also on their heads…

But – few know how to squeeze more profit from the property by some relatively simple actions.

This article will list 9 ways to maximize profit from a multi-family property.
Of course, everything written here – we carried out ourselves in our transactions and for the investors whom we accompany:

2 basic principles in every purchase and every property,
And we assume that they must always be performed:

1. Purchase below the market price – we will never buy a property at its full price
And we hope for a price increase. We make the first profit at the moment of purchase.
We will always get the property below the market price (how? This is already our specialty)
In this way we will also allow a high margin of safety (in case we need excess expenses
about the property below).

2. Purchase in an area with rising prices – we will look for a property in an area where we have not yet
Fascinated by the rise in prices, but the trend following it is clear. so that when we enter
For the picture we are actually already “riding the wave”, ahead of the price increase
and allow the property to reach her in full force, when it is in our hands.

After these 2 actions, there are a number of additional actions below
by which the value of the property will increase – regardless of the market:

3. Increasing the rent – let’s take for example a property that is managed relatively well but has been rented out
more than a year ago It is likely that the rent can be increased for the tenants
thus immediately increasing the operating profit.

Assuming the management was not good, the opportunity even increased – because the likelihood of potential not being exhausted
The rent is even more reasonable. So when we enter the building with our management company –
The game changes completely.

4. Increasing the percentage of occupancy – let’s say that the property was rented for 70% of the apartments in it,
And we raised the percentage of occupancy to 80%. The meaning in profits is understandable, right?
Again, the same thing – good management changes the face of the game and bottom line revenues.

5. Replacing the management company – as a continuation of the previous points – this is a necessary step that will allow
For us to enter areas where she did not touch or did not manage as required, and thus (rightfully) accept
Better value for our management.

6. Rebranding – When the neighborhood undergoes a change and upgrade, the rebranding will change
the building to a center of attraction for a better population.
For example: changing the name of the building, exterior painting, landscaping and more.

7. Operational improvement – reduction of excess expenses (something that will of course be checked even before the purchase).

8. Adding sources of income – such as warehouses, parking lots, laundry room, various machines and more.
All these are sources of income that can be added to the building.

9. Converting the building to a specialist in the type of population adapted to immigration in the area – for example: students,
Adults, government officials, medical professionals and more.

These golden tools help us every day to maximize our investments for us and of course for our investing partners

הפוסט 9 golden tools to maximize profit from a multi-family property (regardless of the market situation) הופיע לראשונה ב-JBS.

Many ask why the USA, it is far away, I don’t know it, why not Greece? Why not Georgia? Or maybe even a holiday apartment somewhere closer? A book could be written about this, but in this article we will focus on 7 main reasons that we see as the answer to this question and why we, as experienced entrepreneurs, prefer the American market by a wide margin

1. Lots of opportunities: the American market is a sophisticated market with many sellers and buyers – millions of transactions per year,
   So that means millions of opportunities a year.
   
2. A lot of information, available and open to everyone: the transparency in the American market is great and makes it very easy for us as entrepreneurs and investors, for example, information such as: how much the property was bought for, how much it was sold for, its entire history, etc. – all at the click of a button in a transparent and visible way for everyone.
   
3. Good legal protections for LLC investments, Title insurance:
   In Israel, when you make a contract, you go to a lawyer and he checks that there are no encumbrances, etc. and then we sign. In the US it’s different! The title company is responsible.
   She checks the full history of the property, which does not have any encumbrances (not only a mortgage, but also any other encumbrance).
   And there was, and the title company made a mistake and didn’t discover a certain thing?
   The mistake will be at her expense (this is the meaning of title insurance), and such a mechanism (unlike the example of a lawyer in Israel) enables a very high level of protection!
   
4. Very wide market circles: the US market is huge. 50 countries
   And in every country there are many markets. Many large countries, very many market cells in each country, ability to move from market to market according to market trends, etc. The bigger the space – the bigger the circles.
   
   what is the meaning of this?

In Israel, for example, North Tel Aviv is the first circle and Kiryat Shmona is the end circle (not in a negative way of course, only in terms of market circles).
The meaning of the circles is the rate of arrival of the effect of changes in the market.

ZA, when the price goes up in Ramat Aviv – it will take some time until it reaches Kiryat Shmona. Haifa/Yakneam for example took 4-5 years to reach the price increases that started in Tel Aviv.

If we return to the example of the USA, then the center of the circle is California, San Francisco, Manhattan, Silicon Valley.
After that the next circuit is Florida, Nevada, and Agas. ZA, here too, there are now markets that haven’t even made it halfway through the price increases. The bigger the space – the longer the opportunities.

5. Diverse and many financing options: from banking to non-banking,
The breadth of this world in the USA is vast and allows a great deal
Creative ways of financing transactions

6. High yields from SCAD in emerging markets: if we bought the property
Before the price increase in our area, and after that a price increase will come –
So when the rent increase comes – our property will already yield higher returns.

Of course, the smart thing is to locate the property for purchase at a lower price than the market
and lead the improvement process so that the high rent
Meet our property as soon as possible. This is exactly the professionalism.

7. Low prices in growing markets, low entry level: let’s take buying as an example
A building with 40 apartments around 4 million dollars and with a yield of around 10%.

Where can such things be produced?

Some people will answer me “in Greece and a few other places”.
True, but with your permission I will bring you back to point #3, which is the legal insurance and the high security in light of the transparency and depth of the title’s inspections, this is again something that makes the USA unique.

These are the main reasons why we really like to invest for ourselves and for our investors – precisely in the USA.

הפוסט Why invest in real estate in the USA? And not in Greece for example? <br>It’s much closer to me… הופיע לראשונה ב-JBS.

This dream sometimes causes us to act out of past dreams and past patterns which is different from residential real estate where there is a place to give weight to the emotional pan in this situation it is important to have a pure business decision, which will bring maximum security and profit over time. Therefore, this article will focus on understanding the big difference between an apartment and an investment versus a partnership in a building. After we understand the huge gap between them, it will be much wiser to proceed to examine the options before you

A single property VS investing in a cluster of houses/building.

Let’s get going

so what should
Invest in a single property or a building?

Many investors consider direct investment in a private house in the US to be their preferred investment.

They dream of a private house that will be registered in their name “in Tabu” and managed by a local company or by the entrepreneurial company that sold the house to the investor.

the truth is,
We also started our investments in the USA over a decade ago in this way.

hall,
After several years in which we purchased private homes for ourselves and our investors,
We have reached very important conclusions regarding investing in a single property, with an emphasis on remote investment:

Here are our conclusions regarding a single property:

1. The profitability of a single property is very sensitive to the repairs that the property needed .

for example:

Property leased for $1,000.
Fixed direct expenses on the property: property taxes, property insurance and payment to the management company.

Assuming property taxes are $200 per month,
Property insurance: $50 per month
And the management company charges $100

That means we will have $650 left after the fixed direct expenses.

now,
Let’s assume that after holding the property for six months, it became clear that the heating system in the house needed replacing.

A new system can cost between $3,000 and $3,500

The meaning of such a correction is that for 5-6 months we will have no income on the property!

The situation becomes even more difficult if during the maintenance period we have to replace the roof of the house.
Here already the cost can reach $5,000 to $7,000!

In this situation, we lost an entire year’s worth of income!!

2. The profitability of the property is very sensitive to the days when the property is empty.

Suppose that after a year in which the property was rented, the tenant decides not to extend the contract and leaves.
This means that we now need to look for a new tenant.

The first step will be to prepare the property for the new tenant.

We will usually have to repaint the property throughout the house
(or at least in part) and sometimes also to clean or replace carpets in the property.

Usually the cost of replacing a tenant will range from $1,000 to $3,000.

Second step – finding a new tenant.

It will usually take between 30-45 days to find a new tenant (depending on the season and the market you work in, of course).
Now let’s say the cost of getting the property ready for the new tenant cost us $1,500 and it took us 30 days to find a tenant.

If you think about it, it would be more correct to say that it is not the investor who lives in Israel who will find the tenant, but the management company he hired, and for that they will charge a tenant finding fee equal to a full month’s income of 64.

Yes, let’s now calculate the cost of changing the tenant
(includes days when the property was empty and includes a fee for finding a tenant):

$1,000 loss month 2016
+
$1,000 tenant finding fee
+
$1,500 cost of preparing the property for the new tenant

Total: $4,500 in lost revenue
Or in other words – loss of profits of half a year!

3. Built-in conflict of interest in the management company for the investor :

When it comes to a single property, the investor has a distinct interest
There will be a minimum turnover of tenants in his property and the cost of maintenance will be as low as possible.

However, the management company has a clear opposite interest – as much turnover of tenants as possible and as much maintenance in the property as possible,
Because for every change of tenant, the management company receives a commission, as you remember, and for every repair in the property, the management company receives a percentage (approximately 20% of the amount of the repair).

4. Very limited ability to obtain banking leverage:

As foreign investors who own one or two individual properties, it is extremely difficult to get bank leverage.
Especially when it comes to properties that are worth less than $150,000.

If you buy properties worth more than $150,000 you may be able to get bank financing, but you will compromise on the return on the property.

ZA, properties that are worth between 150 and 200 thousand dollars will usually yield a return of about 5-6 percent
Compared to a property worth $80,000 that would yield a return of 8-10 percent.

And here are the clear reasons why it is very worthwhile
invest specifically in residential buildings:

Due to the above reasons, several years ago we came to the insight that it is much better for an investor to purchase large groups of properties or to purchase a residential building that includes many rental units,
All of this within the framework and with the cooperation of other investors, thereby achieving distinct advantages over investing in a single property:

1. The sensitivity to corrections is low –
   Let’s say in a cluster of 20 properties or one residential building with 20 apartments, replacing a heating system in one of the houses or apartments will be extremely marginal in its effect on profits and general returns.
   
2. Low sensitivity to changing tenants –
   She is also doing wonders. A situation in which there is no income at all for months as we detailed regarding a single property – does not exist, assuming reasonable management.
   
3. The conflict of interest decreases –
   The conflict of interests with the management company decreases because the management company manages many assets for the group and does not wish to lose a large client for it.
   In addition, holding a large cluster of properties often allows the entrepreneur to own a management company on his behalf or at least directly manage the local management company.

4. And the big advantage – leverage!
   Holding a cluster of properties or a residential building with many apartments allows the group that owns it to get a commercial mortgage on good terms and spread out payments for 30 years.
   

These are the main reasons why we like to invest in residential buildings,
Both in terms of management and in terms of profits .

In the investment groups that we organize at JBS, we use the extensive knowledge and experience we have gained in locating houses and residential buildings at prices lower than their market value.

In this way, we create for investors a ‘capital gain on paper’ already on the first day of the investment, which adds another “profit center” to the transaction.

In conclusion, in this article we reviewed the essential difference between a single property and a partnership in a multi-family building, as parents of children, it is important for both of us to leave as solid a foundation as possible for the generation after us. For this very reason, we invest our investments today exactly as we wrote in this article.

הפוסט How do you buy an apartment for investment in the smartest, safest and most profitable way? הופיע לראשונה ב-JBS.

How do we know where the ideal market is for us to invest in 2022?

“No one is wise like someone who has experience” and that is why we will start this article far, far away in the 2008 crisis, because in order to understand what we are doing today, we need to have a broad perspective.

2008 crisis:

The year is 2008 and the real estate market is in one of the biggest crises it has ever experienced.
The “subprime” crisis, as it was called,
mainly resulted from promiscuous loans and in huge volumes and with variable interest (starts low and jumps up later)
which the bankers in the US gave to high-risk borrowers.

Those borrowers had no ability to repay.

Beyond that, they even increased making and issued these loans for trading on the stock exchange as mortgage-backed bonds,

As well as other advanced financial products that got out of control and were “marketed” to investors
As an investment tool with very low risk.

What did all this cause?

This caused real estate prices to be inflated to “bubble prices”
And a bubble? end to explode….

And she exploded…

And how did it explode…

Starting in 2007, the banks accumulated more and more “bad” loans and they started to collapse.

on Sunday, September 14, 2008
The giant and veteran investment bank, Lehman Brothers, announced
on bankruptcy and swept the entire stock market after him
to the biggest collapse he has known in 80 years.

More and more mortgages have become uncollectible
And forced the banks without any choice to take over a huge amount
of properties whose owners stopped paying the mortgage they took.

So that by mid-2009 the banks found themselves with
A huge amount of houses are owned by them and as you know the role of the bank is not to own the properties but to lend on them.

In addition, every asset the bank is forced to take reduces its ability to make new loans.

The banks had to get rid of these assets – and as soon as possible!!

They did so in many cases at dramatically lower prices
From the amount of the loan they gave at the height of the tide,
while bearing losses of billions
which were ultimately paid for by the American taxpayer.

We gave this move a name: “The Government Rescue Plan”.

From here began a long process of containment and then recovery.

The main markets recovered first,
Namely Manhattan, San Francisco, Silicon Valley
and to other regions that are the strongest in the US economy.
After them came the turn of areas such as Miami and Las Vegas.

Miami took about 7 years to return to the price level it knew before the crisis.

Then, of course, it is the turn of the markets in the third circle to start and rise.
This was the overview of the market situation during the crisis and a little after it.

and now? For those who forgot the title at the beginning, this is not a history lesson but an article about what we learned from the 2008 crisis and how to find the ideal market for investment today, so what did we do as entrepreneurs at this point?

In the first years, after the outbreak of the crisis, we invested in especially “bleeding” markets such as South Florida and the suburbs of San Francisco.

After they doubled their price
By 2014, we sold them and moved our investments to third-circle markets such as Memphis, Tennessee, the suburbs of Cleveland, Ohio, and in the last two years to Pittsburgh, Pennsylvania, which was late in the price increases and experienced double-digit percentage increases.

The market they entered at the beginning of 2021 was the market of the state of Oklahoma.

Emphasis on the largest city in the country – Oklahoma City.
After an in-depth market research (see a separate article on how to use market research) we found that this market is unusual in the US and very attractive for investing in residential buildings.

why?

Because the real estate markets in the US are divided into two main types:

Market type 1:

is the market where the current returns (Mishkad) on the investment are relatively low (4%-5.5%)
But the macroeconomic data are positive (positive macro data: such as positive immigration, an increase in jobs and an increase in income per capita).

Market type 2:

It is the market where the current returns from investment (Mishkad) are high (on average about 7% in the middle class areas and about 9% in the “blue collar” areas), however – the macro data is negative in some or all of them.

In the first type of market, we usually expect low current returns on the one hand
but on the other hand for a high increase in value of the assets over time
As a result of the economic parameters that push the prices
Upward, such as: positive immigration that increases the demand for housing.

In the second type of market, the current yields from SCAD are high
Mainly in “blue collar” areas as a result of a combination of low house prices relative to the average price of houses in the US
and a relatively high NIS that results from low-class tenants who cannot purchase houses, due to their financial situation, and are forced to rent
thus constituting a kind of “imprisoned customer”.

Now, what did we do from here on out?

When we did the market research to make a decision on the next market to enter,
We discovered that in the state of Oklahoma, with an emphasis on the centers of the big cities,
An unusual phenomenon is occurring for investors.

This is what happens there:
On the one hand, it provides relatively high returns from Shkad,
But at the same time – all its macroeconomic data are very positive and strong.

That is,
It can also be expected to have a high current yield on the one hand (to a large extent in renting apartments in residential buildings and to a lesser extent in renting private houses),

and on the other hand,
Also for a continuous increase in value over time that will result from its excellent economic data.

And this is important for investors to know:
The choice of investing in residential buildings in Oklahoma has already proven itself.

The market continues to show many strengths even today in 2022 and combines a constant increase in Sh.
That is, in the average income for a residential apartment,
And equally important – a constant decrease in the percentage of apartments that are empty,
Which means – that the occupancy rates in the residential buildings are at an all-time high!!!

And when investing? This is the recipe for success.

Choosing an ideal area for investment,
Then focus on the specific neighborhoods with the greatest potential for growth and improvement

And of course, a combination with professional and excellent property management.

By the way, when will we sell?

We will sell after exhausting price increases in the area and when current yields fall.

From there we will move our investment to the next suitable area. Already these days we are operating in the area on the border of Oklahoma and Texas, and we will surely write interesting things about that as well, but to the question:

What is the ideal investment in 2022?
Looks like we answered

הפוסט How to find an ideal market for investment in 2022. הופיע לראשונה ב-JBS.

We meet investors who have already understood the importance of letting their money work for them ,
They want to generate passive income from investments, they have already chosen to enter real estate investments – and specifically in the US

At the same time, they don’t know what type of deal is right for them to enter or what strategy they should invest in.

Also keep in mind that many investors feel that they have no control over the transaction, because the entrepreneur is the operator and leverages the money.
It is important for them to put the money in a place where they have a feeling “that they really know what they are doing” and not follow the entrepreneur blindly.

So in this article we would be happy to explain in points why we chose a multi-family investment strategy
And why from our point of view (and from our many investment experiences in the past) this is a very smart investment strategy:

1. Preserving and increasing value over time – you have to understand that there is a huge demand
For multifamily properties, so their value is always preserved
and even climbs over time (even we who know almost every building and
His history – we still work hard to get you a fine property for the deal).

2. In Multi, the value of the building is directly affected by its operating profit –
A multifamily is a residential property like a private house, but when it is above
5 apartments it is considered a commercial property.
This means that the value of the asset is created from the profit it generates.
This is what will determine its price.
For example, if you buy a property that is not well managed, then its profit is not high
due to poor management. However, by more correct management, which will increase the profit –
The value of the building will also increase immediately. We have a non-speculative element here
and can be improved by the property manager.

3. Surviving and succeeding in crises – precisely in crises people drive
Moving from house to building, reducing expenses, etc.
In this light, a good building that is properly managed (even during a crisis) –
Attracts tenants. So that the value of the building will be preserved as well as its profitability.
In some cases, there may even be an increase in the value of the property.

4. Centralized operation – it is easier to manage 10 apartments in a building compared to 10 land houses.
In scattered houses, the area can be large, there can be conditions
And each house has a different character, etc., which can affect and make the management more complex.

5. The owner’s ability to increase the value of the building – in residential buildings it is possible to increase
the value of the building in various ways, such as: increasing the rent, increasing the occupancy percentage,
reducing expenses and more.

6. Diverse potential for profit from additional sources – additional ways we use
to generate profit from the building by adding various ‘sources of profit’, such as: warehouses, laundry rooms,
Parking lots, machines of all kinds and more.

In conclusion –

After hundreds of transactions that we have carried out in aggregate, both for single family, for multi as well as other creative transactions,
We can certainly say to those who ask us that multifamily buildings are a smarter investment that allows both a good return, both more convenient management and maximizing the profit from the property, and minimal risk for us as investors.

הפוסט 6 golden reasons Why did we choose the ‘multi-family’ strategy? הופיע לראשונה ב-JBS.