Not All Sparkling Real Estate: Buying a High-Risk Property? You Should Read This Guide Before - Walla! Real Estate

2021-09-14T06:22:05.907Z

Is it worth buying agricultural land? What is suspended? And maybe a key fee purchase is the solution? In the real estate world, there are many transactions in amounts much lower than the market price. Nir Shmol of the Snir Group explains how it works and what the risks and chances are.

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Not All Sparkling Real Estate: Buying a High-Risk Property? You should read this guide before

Is it worth buying agricultural land?

What is suspended?

And maybe a key fee purchase is the solution?

In the real estate world, there are many transactions in amounts much lower than the market price. Nir Shmol of the Snir Group explains how it works and what the risks and chances are.

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To the full article

A view of the Hatikva neighborhood.

In the old apartments you will find quite a few suspended transactions (Photo: Reuven Castro)

The mines in purchasing groups

In the past, members of purchasing groups enjoyed a significant discount, both in light of the lack of an entrepreneur and in light of taxation and VAT benefits that allowed significant profits for buyers.

In addition, the organizer currently cuts significant sums for managing the group and locating the group, so some of the entrepreneurial profit component goes into his pocket (but still earns less in front of an entrepreneur / contractor who bears the full risk, and is responsible for the entire process after the population and years of testing).

Also, cases that have happened in the past, such as Inbal Or and other collapsed groups, have sometimes overshadowed the successes and significant savings that some of the groups have achieved compared to buying a regular apartment.

Today there are still group organizers with a great history of success.

This is a correct investment sometimes against the risk, taking into account that future profits have been significantly reduced compared to the past.

Purchase of agricultural land

With the big dream it is also important to mention its rupture.

Thousands of Israelis have been tempted over the years to invest in agricultural land in Israel, sometimes they still own it even though they purchased the land more than 20 years ago and there is still a field on the land.

This is one of the most popular investment options today in various publications throughout the Internet and media in Israel - land in Hadera, Bat Yam, Ganei Tikva, Netanya, Raanana and endless possibilities, offering Israelis an achievable dream.

With the big dream offered it is also important to mention its rupture.

A residential neighborhood, since a promised apartment, is still not visible on the horizon.

Buying agricultural land in Israel is an investment from the risky one, given the fact that in most cases the price is so low and the temptation for a future apartment is high.

After all, we all have the story that is passed down from generation to generation in the family about the great-grandfather who was offered a field in Herzliya Pituach and preferred to buy an apartment in the periphery.

If you are already purchasing agricultural land, take appropriate legal advice from the buyer, contact the municipality and check if there are future plans for the area, or if a future road / park is planned there and then the area will be expropriated, and at best the purchase price will be paid by inflation erosion.

It is important to check whether the land is adjacent to a developed residential area, because then it will be easier in the future to approve future plans, when the development infrastructure is close or existing.

Purchasing groups immediately raise its association.

Inbal Or (Photo: Avi Cohen)

Purchase of an apartment with a key fee - "protected rent"

The very fact that most apartments went on the market 60-40 years ago led to the deaths of many of the protected tenants and the non-renewal of contracts with new protected tenants, so this phenomenon is becoming smaller in Israel.

This is a phenomenon that existed mainly in the 80s-70s, when many apartments were bought at low prices by the state authorities, including the Ministry of Defense and the Ministry of Housing.

A low purchase price is given to those eligible, including IDF disabled people, Social Security and those entitled to public housing. In this method, the buyer would buy the apartment at a low price, amounting to thousands to tens of thousands of individual pounds. Until the end of his life and upon his death the property would return to the original owner.

Many of these apartments were transferred over the years to private owners, who owned a property owned by 2/3 and 1/3 for the benefit of the buyer, who over the years paid very low rent to the property owner. Its rate was no more than 20-15 percent of fair value rentals. Under the protected tenancy laws, if the landlord wanted to evict the occupant of the apartment, he had to go to court in a lengthy process and offer compensation to the tenant living in it, reach agreements with him or alternatively transfer him to another similar property at a reasonable distance.

These legal processes would take many years, and in most cases the property owner would have to compensate at a price significantly higher than the actual price of the property in order to evict the tenant. Today, the courts in Israel, especially in light of urban renewal processes, have significantly shortened the process, appointing an appraiser at a very early stage and trying to press and reach a compromise at a very early stage. This is so as not to delay long processes of urban renewal.

There are still protected tenants, and anyone who buys such an apartment with a protected tenant must know that this is not a simple legal process.

Even if the purchase price today is relatively low, there is a very reasonable chance that in order to evict the tenant an additional significant payment will be required.

What is a purchase in suspension?

In Israel, even in light of the fact that the value of real estate increases from year to year, buying land in suspense for those people who have the time and do not need money immediately often leads to better economic results compared to other investment channels.

This is a concept in Israel that describes a purchase of jointly owned real estate. The name "suspended" means partnership. These are usually inheritances divided from the assets of a person who has passed away or a number of landowners who have become partners in one new plot following a consolidation and division plan). Many property seekers come across properties listed as a block and plot only, and sometimes each partner’s share reaches individual percentages in the land.

Of course, these are unequal parts and in some cases dozens and even hundreds of owners. Sometimes this concept is obtained from decisions of authorities that approve city-building plans without the consent of owners by virtue of the law, thus deciding different owners to sponsor under one large plan, in which each holds a small share.

Legally, any person by virtue of his private property is allowed to make a sale / purchase in plots of this type (Basic Law) even without the consent of the other owners (of course, check that there is no contract or agreement that says otherwise, but sometimes "Jewish wars" reach this area, Himself in a deal with developer X and anonymous ties himself with another contractor, and these struggles end up in courts in many expensive hearings, when at this time real estate development on the ground can not be promoted.

The solution to this complex situation is another legal term called "dissolution of partnership", Each owner or part of them goes to court and asks him to order the dissolution of a partnership. The highest price.This is a public tender, in which everyone has the right to participate and bid the highest bid to win.

As mentioned, these are many cases in a field designed for experts in the field and those with great financial capabilities, or alternatively for people and investors with long-term patience, who understand that the more patient they are, the better they can get offers.

In Israel, even in light of the fact that the value of real estate increases year by year, buying land in suspense for those people who have the time and do not need money immediately often leads to better economic results compared to other investment channels.

Purchase at Presale gives a discount, the question of at what stage you buy (Photo: Reuven Castro)

Purchase of assets

In Israel many properties are offered for sale by a receiver, especially in cases where people do not meet the repayment of debt and payments and a court from which a receiver for the creditor's assets. The properties will be sold for as much as possible at a price.

It is important to take into account that although the issue is published both on the official receiver's website and in publications required by law, many of these transactions are closed by professionals in the field, including appraisers, lawyers, developers, contractors and more. The documents properly and on time. In many cases, these are people / companies with deep pockets, who come to price when they are willing to pay sums close to the real purchase price and even beyond.

It is also important to check the legal condition of the property, make sure that there will be no future claims against it from such and other entities and also make sure of its physical condition and licensing by a qualified engineer / professional. Also, do not give up a visit to the municipality in the engineering department to understand future plans.

Acquisition of a property in urban renewal

Today, real estate funds are being established in Israel that specialize in the purchase of such properties in the early stages, in the hope of enjoying a high future profit with the completion of the urban renewal process.

Many opportunities in real estate lie in the purchase of a property that will undergo future urban renewal, both in evacuation of construction and in NAP 38. Sometimes the profit can reach tens of percent and even double the value of the purchase, when the time component is critical.

As the purchase is made at the beginning of the process, the price of the property will be tens of percent cheaper compared to the same property that will be purchased near its demolition / issuance of building permits.

The "wisdom" in these cases is to buy the property at the beginning of the procedure, when competing buyers do not know that it is likely to go through it and therefore the price is relatively low and represents the existing situation and not the future situation.

Before you buy - do all the necessary tests (Photo: Reuven Castro)

Purchase of a property in Presale

Many developers and contractors hold presales, in which apartments are offered to the general public in some cases, and to relatives and family members in other cases, in order to receive the support that the bank requires (usually a sale of 20-15 percent of the apartments).

Therefore, it is possible to receive benefits that currently amount to a 5 percent discount compared to the initial list price.

Beyond that, the bank usually does not approve and this is the usual percentage discount that can reach hundreds of thousands of shekels in apartments of more than 3 million shekels.

Purchase of an apartment from the Custodian General

As is well known, a guardian is appointed in exceptional cases for the benefit of people who cannot manage their affairs (mentally ill / childless / minors without parents). Such a person is defined Jose, with regard real estate this is a guardian for property, unlike Maftrtofos body for people who are unable to make decisions regarding their medical condition.

Guardian appointed by the court and is under the supervision of the Administrator General. All operations are performed under the consent of the court, and therefore It is of great importance for those who intend to purchase such a property to be equipped with a lawyer who understands the field. A real estate transaction without the approval of the real estate court has no legal validity. The court will approve the transaction only if it is consistent with the true economic value of the property, and if it is consistent with the beneficiary's benefit. Of course a note should be recorded in the taboo upon completion of the purchase process and a warning note upon payment of an initial amount.

Here, too, similar to buying from a receiver, it is necessary to assess the value of an appraiser, publish in newspapers, compete between buyers in order to obtain a maximum price and execute a contract according to the rules of the court and its guidance.

Purchase of a property with a different purpose

Beyond the associated costs of the application, i.e. planning costs, consultants, fees and more, there is a danger, of course, that the municipality will find out about the illegal act on the property and will have to bear the consequences

Nir Shmol (Photo: Tal Shahar)

In many cases, certain properties in real estate are actually sold as "apartments", even though in the taboo they are defined for another purpose - for example a warehouse, balcony, service area, public space, etc. The risk in this matter is of course that the transaction is illegal Significant fines also fall into this broad definition when it is done illegally.Many

investors are tempted and purchase such properties at a significantly cheaper price than the price of an apartment, of course, but take great risks.In many cases illegal construction on the roof can be seen in Israel, Invasion of gardens that are defined as public space, splitting apartments, renting apartments that are defined as a warehouse area, industrial, logistical designation, etc. for the benefit of population, mainly of foreign workers who are afraid to complain and want to live on a low budget.

The only way to prepare such an area is to contact the local planning and construction committee and submit an application by an architect for a change of use / overuse for a limited period of time.

And yes, it should be taken into account that even if this is approved, improvement levies of the change of use must be paid, which significantly increase the purchase price.

Nir Shmol is the CEO of Snir, a company that specializes in real estate marketing.

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Source: walla

All life articles on 2021-09-14