Ask Shelly, the real estate expert

Vol XXIV: Is it possible for a non Jew to buy a house in Israel?

shelly88 (photo credit: )
(photo credit: )
For Housing resources click here. A native new Yorker, Shelly Levine is owner and manager of Tivuch Shelly Ltd., a leading real estate company that services all of Jerusalem and its surrounding areas and specializes in English-speaking clients. Click here to send us your questions for Shelly, please include your name, city and country. * * * Volumes I-XV Volumes XVI-XIX * * * Vol XXIV Q: My husband and I are starting out as real estate investors here in the US. We have just started our business, a small corporation. We have plans to make aliya in the coming years. Where can we find information for investors in Israel? Are there any Real Estate Investors Clubs in Israel? We know that networking is key. Any advice? Thank you. A: Many people from all over the world are investing in real estate in Israel. More than clubs per se, the most typical way of doing this is to meet a builder who needs a partner and joining forces with him. Many people from the diamond industry, for example, are today seeking to diversify in real estate investments. My own company is blazing new trails on the investment side, as are several others. In short: It's a great idea for you to pursue. Best regards, Shelly Q: Hello Shelly, I own a 3-bedroom apartment in Jerusalem, in the new Katamon area that I purchased when the prices were at their peak in mid-90s. Later on, the market price of the apartment dropped from 110K to almost 65K and even though I've stopped living there, I had to keep it to avoid immediate losses, occasionally renting it. Right now, the tenants stopped paying, and living far away I don't know how to force them to pay, evict them or even try selling the apartment. I only visit Israel once or twice a year for a week or so... What would you suggest? Thanks in advance! A: The good news is the pendulum has swung back in a much more positive direction. Waiting was a smart decision. This is a hot developing area, and I urge you to re-examine the market if you are inclined to sell at this time. Falling into non-rental paying tenants is never a good thing. You need a lawyer to deal with that, but there are certain tactics that you might consider. Some people in your situation, with proper legal counsel, have shut off electricity and water, etc. This may be drastic, but the tenants are in fact stealing from you. Please find a good lawyer soon to handle this... but meanwhile, as I said, the good news is the reversal of your property values. Q: Is it possible for a non Jew to buy a house in Israel (no mortgage required), and if so, how long are they allowed to reside in Israel? A: Israel is a democratic society. There are certain areas where it is easier for non-Jewish residents to buy, i.e., places such as Maaleh Adumim, over the Green Line where various Israeli laws are applied less stringently or not at all. It's also easier to buy a house that has private status as opposed to the more typical land-lease framework of the Israel Lands Authority. It would be worth speaking to a competent lawyer who can provide you more fully with current applicable laws and policies. Q: My mom has owned an apt in Jerusalem for many years. About 50 years ago, she rented it for key money, and since that time the tenant has not paid my mom one penny of rent. If my mom wants to sell it can she? Can she sell it with the tenants still living in the apt or do they have to move out first? A: That's not very nice! Key money is an eccentric relic of Israel's past. I haven't even heard of a key money issue for years. The best counsel I can offer is to find a lawyer in Jerusalem who specializes in real estate law, who will know your mom's rights (it should be an older attorney, as I doubt many young ones will have much experience.) Q: I am moving to Israel in June for about 8 months. I need to get a two bedroom apt in Tel Aviv, close to cafes, grocery stores, etc. Other than craigslist, I have not found much. Any suggestions of who to talk to, where to look? A: Actually, Tel Aviv is not so easy to find just what you want for a relatively short-term basis. The best idea is to ask any local friends you have to monitor the weekend newspapers, especially the local ones like Tel Aviv and Ha'Ir, to see what turns up. Rentals are so in demand where you want that people typically rely on ads or word of mouth--more so than agents. Good luck. Q: I own two 3-room apartments in Safed. I need a trustworthy and competent real estate broker to manage and rent the flats for me, or as an alternative , I would like to trade these flats for other apartments in a different part of the country. Do you know of a real estate broker that can handle this job in Safed? A: Safed is out of our radar zone. It is really important to have someone you can trust on-site, close enough to help manage your needs and the process. I suggest you speak to local neighbors of the property you own; word of mouth is a great way for identifying reliable agents in the area. * * * Vol XXIII Q: If I were to buy an apt. in Israel and rent it out, am I subject to declare said income in the U.S? Thank you. A: I am not an accountant, but the rental market offers typically only 3-4% return on investment. Most people do not even cover their mortgage payback with income from rentals. Many people ask me if they can take their mortgage cost as an expense against their income tax liabilities in the States. Are you planning to take a mortgage to buy an apartment here, which would make this question also relevant for you? My point is there is unlikely to be any profit in such a situation from rental income. Q: Planning a trip from mid-January to mid-February, and would like to rent a one bedroom apartment in Rehovot. Is this feasible? And what should I expect the cost to be for a 1 month period? Can you recommend a contact or agent to accomplish this? A I regret that Rehovot is one of those communities that I simply have no real connection with. Short term rentals are usually word of mouth: If you know any friend there, ask them to keep their ears open, privately or perhaps in their synagogue, and that is your best opportunity to find one. Shelly Q: I am curious to know if there are any English speaking sections either within Jerusalem itself or possibly Beersheba. Are furnished rentals easily available for 4-5 months and what are the range for such rentals? A Jerusalem has several sections with heavy concentrations of English speakers. Amongst these are: Talbieh, Baka, Ramat Eshkol, Bayit Vegan, satellite suburbs such as Maaleh Adumim and many others. It depends on lifestyle, religious background and budget. Do you want an apartment or a larger house, etc? In Beersheva, only the suburb of Omer sounds like it meets these criteria. The price will vary depending on which neighborhood you prefer, so please provide further guidance. Q: Interested in buying an apartment, townhouse, house or buildable lot on a kibbutz within five miles immediately south of the Kinneret. Any ideas? So far my inquiries have been met with "We can't". A: Today there are many new building projects on kibbutzim and moshavim all over the country. I am not well versed in the northern region, sorry. I do have one of my builders who lives in that area and is actually building just north Kiryat Shemona (in Tel Hai) as well as in Karmiel. Does either of these two lovely sites appeal to you? For the Tiberias area specifically, contact the Tiberias City Hall and ask them for a referral list (Engineering Dept.) of all new projects in the area. I wish you success in locating your dream home. Q: In a three story apartment where people own different size apartments how are the Vaad fees divided? Since one person can do as much damage and mess as 10 people does it not make sense that everyone pay equally even though the apartments are of different sizes? Someone told me it should go by percentages. But why should someone who owns 29% pay for the damages done by someone who owns 3%? There is even one apartment that used to be 3 separate units but have been knocked into one. Only one person lives in it where there is another apartment that is 1/3 of the size but with 4 people in it. What is the law, if any? A: Vad Habayit usually gives every residential unit one vote in decision making, no matter what size of the apartment. People pay equal fees each month for cleaning of public parts of the building, elevator upkeep and so on. If the Vad decides on a major renovation (i.e., something to do with the roof or changing or adding an elevator), then it is also usually one vote-per-apartment. There are many, many rules and regulations relating to this whole subject. The Housing Ministry will be happy to direct you to the proper office or website to review this in more detail. * * * Vol XXII Q: My family is planning to make aliyah in the next two years. In the meantime, in order to encourage us to make aliyah and as a potential investment, we have closed on an apartment to be built in Nachlaot, Jerusalem, specifically on a street off of Agripas. Is Nachlaot a good investment? Will we be able to rent out the apartment until we can move? Is Nachlaot a good neighborhood for young families to live? Any advice would be appreciated. Thank you, Abigail. A: Dear Abigail: You cannot go wrong anywhere in Jerusalem as far as my experience shows. Nahalot is an up and coming place, great location, easy to rent out. Everyone loves to buy older things there and renovate them. It is "gentrification" to a high degree. We wish you best of luck on your solid decision. Shelly Q: We are thinking of retiring to Jerusalem in 10 years time, but would like to buy a four or five room apartment in somewhere like Givat Shaul / Kiryat Moshe, where we have friends and family. Can you advise as to how much we would need to put down by way of a deposit so that the rentals (net of tax?) would cover the interest on the loan together with running costs on an annual basis until we come on aliyah? A: If you take a Sterling mortgage where the payments are in Sterling, then the bank will give you about 60% of the overall cost of the home. If you take a Shekel-based mortgage, with payback also in NIS, you will likely be able to get a higher percentage of the price. You can contact United Mizrachi Bank in London or the other Israeli extension banks there for more detailed counsel. Once you get answers to these core questions, I have a wide variety of homes in Jerusalem that should be of specific interest to you. Shelly Levine Q: Shalom Shelly, My husband, daughter, and I will bs"d be making aliyah within the next year. We very much have our heart set on Jerusalem, but the prices there seem to be skyrocketing. Any ideason affordable neighborhoods or projects that are within walking distance to the kotel? (it can be a long walk even!) A: The best idea that comes to mind is on Hanevi'im Street. This area is surprisingly close to the Kotel and yet is just now (next 2-4 years) being developed, or 'gentrified.' The best I can advise is to find an area that is just starting to take off, as is this area, and BUY EARLY! Q: Hi, I'm an oleh chadash that rented a small apartment in Kfar Saba. It has a big water filtration from the floor over me, with a stinky smell and is destroying the property. I fear even for my health though there is fungus on the wall. I spoke with real estate agent and he says I need to talk to the owner. The owner says he doesn't want to fix it. What should I do? I signed a year contract and there are another 10 months to go. A: Did you see the apartment before you rented it out? Is this a new, sudden problem, or a pre-existing one? You have more control than you may imagine. It's your money that needs to be paid every month. The landlord must understand he has to take responsibility for this. He knows that it's a big process to evict you, so give him two choices: Release you from the lease OR fix it to your satisfaction. He must know that you will consider stopping to pay the rent if he doesn't accept either of these options. Then seek out the local agency that protects tenant rights and consult with them. Be tough and let him know you will not put up with this situation. He has an obligation to correct this blight. Shelly * * * Vol XXI Q As a result of the last conflict with Lebanon and Hezbollah, have apartment and other property prices declined in the north of the country; and if so, do you see this as a permanent trend? A: It's too soon to say, but I would not expect any marked decreases in value. Unfortunately so much of Israel has been hit in recent years, if not by missiles then by terror attacks, that most buyers simply assume a "it can happen anywhere" attitude and let other considerations guide their buying decisions. Q: Shelly, my husband and I are looking for a list of all the kablanim (with phone numbers) in Maaleh Adumim to buy a new home. We can afford up to $144,000. Would any apartment be ready in less than 1 year? A: Having listed (and sold homes) in Maaleh Adumim for the past 21 years, I can tell you it's a great community, one of the best in Israel. The short answer is call my office and I'll give you answers by phone, either me or Yehudit, 02-5662499... with pleasure. Shelly Q: Dear Shelley, Why has Har Homa (a.k.a. Homat Shmuel) become the Paris of Israel over the last 4 years, rather than being aggressively marketed to the Anglo community? Nothing against our French brothers and sisters, but it strikes me as strange that a new neighborhood so conveniently located in Jerusalem - 2 minutes from Talpiot - should be so overwhelmingly neglected by the English-speaking community. Would appreciate any insights. Thanks, Julie A: A very interesting question, Julie. There is no master plan to populate this or that community with any specific ethnic group. But it does happen. Look at the serious clusters of French and British in Netanya, the Russians in Bat Yam, and all my "English speakers" in Bet Shemesh and Modi'in (especially Buchman). It has to do with image, word of mouth, marketing specialization of the main real estate marketers in a given neighborhood, and many other factors. In my experience, once a certain center of gravity representing one group decides on a specific community for whatever the reason, that decision often snowballs and multiplies the interest of that group in the community. But I must admit, I have NEVER heard Har Homa referred to before your letter as the "Paris of ANYWHERE." Best, Shelly Q: My husband and I just moved to Israel. We are planning on living in Rehovot for 5 or 6 years and then moving preferably to Jerusalem. We would like to invest our money in an apartment or duplex, but how can we be sure that our investment will appreciate? I recently read an article about declining prices in the Tel Aviv area. What factors should we consider in purchasing i.e. new or old neighborhood etc. Would it be wiser to purchase in Jerusalem now and rent it out until we are ready to move there? A: There are many opinions but I firmly believe that you can never go wrong by investing in Jerusalem. There is only one Jerusalem (there are many Bat Yams and Nes Zionas!), and only one Jewish people, and many Jewish people will always want to own a home in Jerusalem. You can buy second hand, you can buy fixer-uppers (if you love aggravation) or you can do what I generally recommend: Get in really early on a solid, safe NEW building. But be amongst the first ten families when the prices are typically as low as they will ever be. Then sit back, watch them build it, rent it out, cover your mortgage with that rental income and just watch the value appreciate consistently over the following 5 or 10 years or longer. Or better still...come live in it! Best, Shelly Q: I am making aliya the next trip and am in the process of buying a home. I am planning on buying it with my friend who lives there already. What are the benefits that may be lost with aliya and single ownership vs joint? I would be paying about 70-90% of the costs and she would provide the rest as it works out. We are not married and are talking about that later. I am looking for direction on ways to proceed with the transaction. I am 59 and am looking to quit work here and move. I have enough in US tax deferred accounts to pay for the home, but the tax penalties would be very large. Thanks for any help on this. A: If you have never owned a home in Israel, then you should be entitled to aliya rights. If your companion lives in Israel and at one point owned a house, then you cannot put her on the title of the house along with you and still get those benefits. If she is an olah chadasha and has not owned a home, I think that you need to be married to derive the aliya mortgage. Perhaps the best way is for you to own the residence yourself but have a separate contract with her on her rights within the relationship. The government of Israel only views married couples or singles as "units" that they deal with. I can't remember any experiences of an unmarried couple buying a home and utilizing aliya rights. I advise you to ask your aliya shaliach or Nefesh B'Nefesh ( about this specific point. Anyway, hurry up and leave that snow for the sunshine of Israel! Shelly * * * Vol XX Q: My wife and I will be making aliya in November. We are both realtors in Atlanta and would like to continue in real estate in Israel. What are the requirements? Is it possible without speaking Hebrew at the moment? Also, we tried getting in touch with a realtor in the Modi'in area in order to get information on apartment rentals and have received no response. Since we are used to a rapid response, is this part of the Israeli psyche? Or, did we just run into a reluctant realtor? A: If you had called ME, we answer immediately and also provide rentals to olim throughout the country without taking a rental commission! This is one way I contribute to encouraging aliya - and mazel tov on your decision to come join us, by the way. There is a simple test that needs to be passed (given twice yearly) to secure your realtor status in Israel. Depending on what market you wish to focus on, language needs will be determined, but chances are good that you can get by at first with a bare bones working Hebrew--and of course there are niches in the English-speaking market and so on. Please come in and talk to me when you arrive and I will happily review your CV's and see if I am able to offer any relevant advice. Best regards, Shelly Levine Q: We live in South Africa and plan on returning again to Israel. We have joined a private scheme in Israel via an advertisement on the internet whereby a group of people purchase land and then the apartment block is built. At this stage we have given our name but because we are living overseas, we have not been asked to sign anything. I am in touch with the project head by phone. There are 11 potential families so far and the project needs 24. Do you think this kind of scheme is risky or is it acceptable in Israel and do you think it is too early to appoint a lawyer? Naturally we are very concerned. Thank you. A: You have not given me quite enough information to judge whether this particular scheme is risky or not. Here are general rules for such situations, however: First, make sure that your deposit goes straight into an attorney's escrow account where his or her professional duties and reputation are at stake. Secondly, confirm that the project has solid financing from a bank, with a bank escrow account holding all your payments through the conclusion of the project according to the routine laws of Israel for such projects. Thirdly, make sure that you are entitled to claim a refund of your money at set periods of time IF the builder falls behind getting his permits to build the project from the government, the municipality, etc. I can think of one major project that literally hundreds of people have bought into over the years and it has totally dragged along. Don't fall into that trap. Shelly Levine * * * Cafe Oleh experts have been chosen for their knowledge and reputation. Cafe Oleh does not take responsibility for any advice they offer. Click here to send us your questions for Shelly, please include your name, city and country.
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