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Is it worthwhile for a self-employed person to buy an office instead of renting one?

Profitable commercial real estate is not a simple field, but it may be that for the self-employed it is a better solution than buying an apartment in Batumi. What are the options, what are the trends and how can you leverage the money?

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• Offices

David Rosenthal

Thursday, 21 October 2021, 09:20 Updated: 09:21

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The corona plague has taken the office market by surprise.

In recent years, construction has begun on hundreds of thousands of square meters throughout Gush Dan. Everywhere you can see cranes or towers whose construction has been completed.

Some have wondered who will occupy those offices, To the hybrid business model as more and more employees have discovered that it is possible to work from home. Immigrants.

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Not just the view from the floor: things to consider before renting an office

To the full article

No money for an apartment?

Maybe an office is the right solution (Photo: ShutterStock)

In terms of the self-employed, they discovered that no longer need to pay for Terrazza 'unnecessary and can do without, but anyone looking for a small office of 100 sq m having trouble finding and for good reason. In most cases, developers do not sell small units.

There are those who purchased within the framework of the purchasing groups and Those who have purchased a large office and do sublease, but they soon discover that income-producing real estate of this type is not as simple as a residential apartment.

Many get stuck with an unleased office that costs them a lot of money.

In addition to the financing costs they have to pay property taxes and management fees, which makes the deal unprofitable.

But still, for the self-employed the option of buying an investment office may be much more lucrative than buying an apartment in Batumi.

The rise in apartment prices makes it difficult for many to buy an apartment and thus owning an office allows for a nice leverage of money.

Where to buy an office

According to Yotam Ben Hamo, co-CEO of the Hacham Group, which specializes in locating, acquiring, managing and improving office space in a prime location in Tel Aviv, we encounter lawyers, insurance agents and freelancers who have purchased offices of various sizes in what was once considered a business opportunity. group Buying or directly from the entrepreneur "on paper" but they do not know how to make their property segment.

"the basic question in the purchase of income producing real estate is where young people want to live and work," says Benhamou, "the main resource of Israel is the Jewish brain and motor Handel They are the young. Who wants to live in Petah Tikva? Tel Aviv is flowing south and still offices being built in the south of the city will be more equal than in Ramat Gan or Bnei Brak. What happens is that the municipality takes public buildings and moves them south.In this way, it benefits twice - the land of the evacuated areas in the north and the city center is worth its weight in gold, and the public buildings strengthen the demand in the new employment and residential areas in the south. "

The new trend - mixing uses.

Project simulation by V5 Architects (Photo: Simulation V5 Architects)

Yotam Ben Hamo (Photo: Yachz)

In addition, Ben Hamo says, "People today are looking for complexes that offer a mix of uses - a complex that has both daytime and nightlife. For example, the Hassan Arafa complex currently under construction offers 14 80-dunam towers, including a large park, hotels, offices, commerce. Another rule is the purchase of offices in complexes and not in a single tower, and access to public transportation also plays a role - for example, complexes near the train

.

In his opinion, the IDF will not suffer from abandonment because it has a transportation solution and is at the center of mass transportation arteries.

Why offices and why in Tel Aviv?

"Of all the office towers in Tel Aviv, 70% of the land is not for sale and not in vain. Entrepreneurs do not give up on income-producing real estate.

The large development companies enter into long-term agreements with tenants during the construction phase.

It should be remembered that a building is supposed to return the investment after 20 years, and thus it can be demolished after 50 years. "

How to find small offices

The problem is that in Israel and especially in Tel Aviv there is no platform for investing in offices and those who enter second-hand sites will not find small offices for purchase. Smart Group offers a solution for buyers who have offices that got stuck after purchasing on paper and actually do not know how to turn their property into a profitable one. This allows self-employed freelancers who do not have the money to buy an apartment to invest in small amounts and raise their money (NIS 300,000, for example).

According to his brother-in-law, this is also a tax solution for the self-employed and company owners (instead of paying a dividend, use the company's money). He emphasizes that the firm is registered and the buyer has signed a convenient sharing agreement that allows him to go out whenever he wants. The group locates offices for purchase in areas ranging from 100 square meters in office towers in Tel Aviv that identify demand from end consumers in Tel Aviv, and it jointly purchases the offices with investors after receiving Form 4.

The group usually closes in advance with tenants - large commercial companies mainly in the fields of finance and high-tech.

According to his brother-in-law, their advantage is that they purchase large areas and so the more land they own, the greater the chance of maintaining and increasing the value over time.

The advantage for the investor is that he does not have a headache and does not have to look for tenants and deal in the property.

In addition he gains the future value elevator.

Profit for the tenant - receives a property with a high level of functional finish without having to deal with renovation, but the price is embodied in the current rent.

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