Profiting in real estate is not all that difficult, but it does require a time commitment and a lot of hard work. It’s all about the acquisition of property and pending purchase value. Making money in real estate is a dream that millions of people have. Profiting is not that difficult or mysterious as some would lead you to believe. And today could possibly be the best time to do that. If you can buy low and sell high you can make money.PropertiesThere are at any given time under foreclosure many fine properties whose owners simply fell behind on their payments. As a result, exciting new businesses that specialize in the acquisition and resale of bank owned properties (REOs) have been springing up around the US. The image of a real estate investor many people have is a landlord with many apartment buildings to his or her name, or a Donald Trump figure, with many hotel properties or commercial real estate under his or her belt. But an investor does not have to hve millions of dollars invested, you can start with one property. But you do need to get out there and start doing some marketing, talking to people, looking at properties, and making offers. It is no longer required to maintain hefty bank balances to be able to bid on a piece of property. When you have done all your preparation, begin with REOs so you can gain experience, and then you can try your hand on some of the other foreclosure properties. There are thousands of distressed properties across the country.BuyingBuying foreclosed property can be a great investment or a ticket to that dream home you always wanted. Buying an apartment building is a great way to invest in commercial real estate. There are several techniques for buying real estate at lower-than-average price, and all of them carry their own set of risks. Any realtor will tell you that buying and selling homes is not for the faint of heart.If you can improve your credit before buying a home so that you can qualify for a better loan, you should definitely consider doing so. The quicker you are approved for a loan, the quicker you can start buying properties and the quicker you can start making money.Investing in properties is a very rewarding career path. Making money in real estate is never as easy as some people would try to lead you to believe. But it is certainly possible for anybody to do. Always remember all smart buyers know in real estate know that you make your money when you buy the property but you don’t get paid until you sell it.
Buying real estate in Israel needn’t drive you crazy. If you know what questions to ask, you’ll be able to navigate the legal maze much more easily.Who owns the property?A majority of the land in Israel is owned by the government. Only a small percentage is privately owned. When you buy an apartment built on land owned by the government you get a long-term lease for 49 or 99 years. At the end of the lease period the lease is renewed for an additional 49 or 99 years. The land is administered by a government agency called the Israeli Land Authority. Simply put, you own the property but the Israeli government owns the land it sits on.How could zoning affect me?Every city, town or village has a town plan. This plan sets out how large the houses can be, how tall they can be, how far away from the road they have to be situated etc. Before you purchase an apartment it’s prudent to check out what is being planned for the neighborhood. Is there an empty plot of land next door? Is it slated to be for public or residential use? Could a tall building be built there?It is also wise to find out whether the house or apartment you are considering has used all its building rights. If this is so, you will not be able to obtain a building permit to make additions to the house unless the town plan is changed, which can be a long and expensive process. You should also check to see if the property you are buying is built according to the building permit. If it isn’t, you run the risk of being forced to dismantle any illegal additions to the house.What do I need to know about conversion costs?Prices of second hand apartments in Israel are often linked to the US dollar. This means that the price is paid in shekels according to the representative rate of exchange of the dollar to the shekel on the date of payment. However when you sell your dollars to the bank or money changer, you are paid a lower rate of exchange. When you buy dollars from the bank or money changer you pay a higher rate. The representative rate of exchange is the average between the high and low rate as set out by the Bank of Israel every day (except Saturday and Sunday). All this means that when you convert your dollars to shekels you lose money because of the difference between the representative rate and the rate at which you sold your dollars. Additionally, the banks charge a commission for the conversion and for receiving foreign currency. These are conversion costs and should be included in your budget as part of the closing costs.If your money is in dollars, you will be financially better off if you can pay for the apartment in dollars and avoid any conversion costs. However, since the shekel and not the dollar is the legal tender in Israel, the seller does not have to accept payment in any currency other than the shekel.When do I need to pay for the apartment?In many countries the payment schedule is a very easy affair. Ten percent is paid upon signing the contract and 90% is paid at the closing. This is not the case in Israel. Although the law does not prohibit such a payment schedule it is not customary.In Israel, you are free to set out any payment schedule you want, but there are some issues you need to take into account. For instance, the process of getting a mortgage is often not a quick one. It is a good idea to give yourself at least a month to arrange the mortgage. If the seller also has a mortgage, he has the option to transfer his mortgage to another property instead of paying it off. That can take a few weeks if not longer. If the purchase is part of a housing chain so that the seller needs to get money from you in order to pay for the house he is buying, two or more transactions might require a parallel payment schedule.You may also need to adjust your payment schedule to take into account funds which may only be liquidated by a certain date. Money should be held back until all the tax issues connected with the deal are settled and this also takes time.Since payment schedules can be complex, you should never agree to any arrangements without consulting your real estate lawyer. If you don’t get it right, you could find yourself unable to pay on time through no fault of your own.How do I protect my investment?The payment schedule means that you will pay money in advance without actually taking possession of the apartment at that time. After the first payment, your lawyer will register a notation with the authority with which the property is registered. A pledge in your favor may be registered with the Registrar of Pledges. This prevents the seller from selling the property to someone else. Payments should be held back or held in escrow until the seller completes certain acts or presents certain documents. For example some payments should be held up until the seller’s mortgage is lifted or the taxes connected with the transaction are paid.How much tax will I have to pay?Every real estate transaction has certain taxes associated with it. The seller has to deal with capital gains tax, sales tax, betterment tax and sometimes property tax.The purchaser has to pay purchase tax. This tax has to be paid within 50 days of the signing of the contract. The tax is computed on a sliding scale and is easy to calculate. The more expensive the apartment, the higher the tax. If the purchase tax is not paid, the property cannot be registered in your name. Lateness in paying the tax will incur fines. Your lawyer will be able to tell you how much the purchase tax will be for any apartment you are considering, so that you can add this figure into your budget.When can I move in?Transfer of possession takes place on the day of the last payment. The last payment is made in cash, bank check or transfer, and the purchaser is given the keys to the apartment at this time. The parties should meet at the apartment so that the purchaser can have a chance to look around and make sure the apartment is in the same condition it was in on the day of the signing.Second hand apartments are bought as is. This means that the purchaser cannot sue the seller for any defects existing at the time of the signing or any hidden defects that the seller was unaware of. At this time the meters are read to make sure there are no outstanding utility bills.When does the property get registered in my name?After the final payment, the house is registered in your name. At the time of the signing the seller had signed an irrevocable power of attorney empowering both lawyers to complete the transfer of rights. At the final payment this power of attorney is given to the purchaser’s attorney.If all the paper work is not yet prepared, money is held in escrow by the seller’s attorney until all documents necessary for the registration are in place. The registration can take several months. After an apartment is built, it takes several years until the whole project is registered in the land registry. Until this registration takes place, the rights in the apartment are registered with the company that built the building.
Real Estate InvestingA current hot topic on television, real estate investing is seen by many as a way to “Get Rich Quick”. What they don’t explain on shows like “Flip This House” is that the investors are professionals with years of experience. People that are not experienced or committed to learning the ropes are in for a hard lesson if, and when, they bite off more than they can chew. One of the best things a real estate investor can do is learn the local market conditions.Know Your MarketUnderstanding you environment and market conditions will definitely give you a chance to make your investment a success. For instance, buying low and selling high is probably not going to happen in buyer’s market conditions. Of course there are exceptions to every scenario. When in doubt, do your research. Check out the newspaper. Watch the homes for sale in your own neighborhood. See how long they have been on the market. If you are planning on having a professional real estate agent market your home, talk to them. Get the information about market conditions prior to making the initial investment.Where to Look1. Look in the newspaper: Read the local real estate section in the newspaper.2. Pick up the free magazines listing homes for sale at the grocery store.3. Visit the neighborhoods in which you would like to invest and watch how long homes are sitting on the market before selling.4. Check the internet. Find a local real estate website with information regarding local real estate market conditions. For example, a real estate agent in Birmingham, Alabama offers information on the Birmingham Alabama real estate market conditions and advice for home buyers and sellers.Once you have familiarized yourself with your local real estate market, you will have a better idea of what to expect from your investment. Remember, there is one consistent fact to the real estate market, it changes. So staying current on the market should be a priority with any real estate investor. Once you have become educated on your real estate market, you will be able to look for homes that have good investment potential and be able to discern whether or not a positive return on investment will occur within your time frame. Which in turn will make your investment scheme a success.