In February 2015.Recently, there has been an extensive advertising campaign for the Karmey Gat neighborhood project in Kiryat Gat.The nature of an advertising campaign created by good professionals is that it shapes public opinion and causes people to consider options they hadn't thought of before.One of the recurring questions lately is the question regarding Purchasing an apartment in Kiryat Gat for investment.For those who don't have time to read until the end, I'll start by saying I am unequivocally against it.. For everyone else, I recommend continuing to read to discover why I am against Gindi's "deal of the decade.". By the way, I didn't write the article against Carmei Gat, Kiryat Gat, or Gindi. It's simply an example that helps illustrate several decision-making failures made by people who want to invest but don't want to be investors. What I'm writing here can be extrapolated to similar projects in Harish, agricultural land anywhere, etc.In this article, I have only addressed investors. Regarding purchasing an apartment for residential purposes, the considerations are entirely different, and I may write about that in a separate article.After the long introduction, it's time to begin. What is the purpose of the investment?What is the goal of the investment? This sounds like a simple question, but a wrong answer here leads to wrong decisions. An investor generally looks for two things:1. Current yield – Receive rent for the apartment he purchased.2. Property value appreciation potential Personally, I usually ignore this part almost entirely when examining an investment, as price appreciation is speculation that may or may not materialize. If asset value appreciation is something I'm willing to risk, then the stock index has a better chance of increases. Moreover, I try to operate on the principle of profit on the investment at the time of purchase, not at some point in the distant future.I have a whole article about Calculating the yield on an investment property. Regarding current return, let's say you invest a million shekels and can start receiving the money in a month or in three years. Which would you prefer? Most people wouldn't hesitate to decide that it's better to receive money in a month rather than in three years. Nevertheless, choosing an apartment for investment from a contractor will only yield income in a few years (in the best case) and not immediately, like Investing in a used apartment.Can the apartment be applied to The Refrigerator Test, Would you be willing to buy a refrigerator for ₪5,000 with the following purchase conditions:The final purchase amount is unknown and may vary.You will receive the product in a few years, but with a possible deviation of a few months and after you pay the full price in advance.The product may differ from what was promised And of unknown quality.Let's examine section by section in detail:The purchase amount is unknown Since it includes various attachments, payment to other parties such as an attorney of the contractor And payment for apartment renovations, including various mandatory renovations.Delivery date is unclear., Check the contract. The contractor sets a date in a few years but also allows for extensions without penalty for months.The product may differ from what was promised This is also stated in the contract. You can check and see that reducing the size of the apartment by 3% is permitted. The floor plan shown to buyers is "for illustrative purposes only" and is not binding.There is no logical reason to buy an apartment from a contractor for investment and wait two or three years for a return. However, there are several factors and cognitive biases that push us in this direction:A price that seems cheap to us "A new apartment for under a million shekels? I'll take two..." We're used to looking for apartments in our area and suddenly "discover" apartments that are much cheaper elsewhere. This seems like a good deal to us. But in real estate, unlike other products, the price isn't determined by production costs but mainly by supply and demand, which in Israel stems from the apartment's location. Therefore, if a three-room apartment in Givatayim costs two million shekels and in Kiryat Gat it costs less than a million, it doesn't mean anything about the advisability of the purchase.More on a price that seems cheap and irrelevant data – When we look for a new mobile phone, we check comparisons of device features and prices. Many phone reviews include data such as the number of megapixels in the device's camera, with various tech writers going so far as to state that a certain phone is worse than another because it has "only" 10 megapixels in its camera. Photographers know that the number of pixels in a camera says very little about the quality of the image it produces. However, people have a limited ability to process information, which is why computers used to be measured by "clock speed" and cameras are measured by megapixels, etc. By the way, for me, most of the phone's active hours are spent on GPS, and there is almost no information in technical reviews about the GPS quality of mobile devices. How does all this relate to Ginidi and Kiryat Gat? Look at this table – https://gindi-gat.org/index/pp_image Can a table be presented that is exactly like the "Megapixel" table, meaning a table with more or less meaningless data intended to convince us that purchasing in Kiryat Gat is a good deal? The table shows the price according to a parameter invented for marketing purposes, train travel time. That is, we are supposed to be convinced (and probably will be) that the only parameter related to apartment price is travel time. On the train In Tel Aviv terms of travel time/price in shekels, Gindi in Kiryat Gat is a great deal. Of course, this is a big absurdity and there are many other factors that influence the price. For example, what is the quality of education in Kiryat Gat? (I have no idea).Past events – Everyone knows a friend who bought an apartment in a place no one expected and suddenly its price jumped. Of course, Gindi also knows such places, which is why their marketing approach resembles that of Modi'in. In practice, those who bought an apartment in Modi'in truly enjoyed a sharp increase in their apartment's value. Is this because they "knew how to identify an opportunity"? Not at all, The entire market has risen sharply in the last decade. This is true for Modi'in, Kiryat Ono, Holon, and Afula. By the same token, one could say that what was does not necessarily mean it will continue to be, and therefore, at least from an investment perspective, the likelihood of an apartment's value increasing more in Kiryat Gat than in Petah Tikva is not at all clear.The three biases listed above can make us forget completely simple facts that every investor should remember:An investment should yield a return.. As an investor in a new location without a kindergarten, grocery store, or traffic light yet, do you have the ability to estimate the rental income that will be received? Assuming that for someone buying an apartment for residence, the legend of a 35-minute train ride to Tel Aviv holds true (I will return to this later), would someone looking to rent also agree to similar conditions?Restless mind – One of the reasons people prefer an apartment from a contractor over a used apartment is the thought that with a new apartment from a contractor, they get "peace of mind." Most people only buy an apartment from a contractor once in their lives and therefore don't have experience with the full meaning of this. They compare buying an apartment to buying a car, for example. With a car, the newer it is, the fewer malfunctions it has. With an apartment, the situation is completely different. According to Technion research 100% (100%!) Apartments are sold with construction defects. This means you only think you bought a finished apartment, but in reality, you'll be seeing a lot of the contractor's people. Unlike with a used apartment, where if you're not satisfied with a professional after a leak repair, you can replace them, with a contractor's apartment, you're always with the contractor's professionals. So yes, there's coverage for labor costs, but what about the lost workdays and the stress? After all, you initially preferred to pay more precisely because of the fear of problems.Another article on Karmey Gat will be published soon, covering the marketing methods for this project. It will discuss who should consider buying there and who should stay away.
You're a champion! If they had listened to you Homebuyers and policymakers Apartment prices weren't this high.Well done!Reply
Shmuel, thank you very much for your kind words. I hope that as a (fairly) small citizen, I have truly managed to influence a few thousand people who saw my lecture on YouTube or read my articles here. Have a nice day. Much success. Pomegranate.Reply
If I'm looking for an apartment for living, not for investment, are you still against buying in Carmei Gat? There are still no building permits... It's about a purchasing group - Kiryat Ha'achdut... Can I consult with you personally?Reply
Hello Karen, I am not against purchasing for housing. Considerations for purchasing a home are very different from purchasing for investment. However, I am definitely against purchasing groups. If you are going to buy, I recommend buying directly.Regarding personal advice, I'd be happy to help. Details on how to consult with me can be read here: http://www.effectivemortgage.co.il/%D7%A4%D7%92%D7%99%D7%A9%D7%AA-%D7%99%D7%99%D7%A2%D7%95%D7%A5/Good luck.Reply
Hi RimonI just finished reading your mortgage guide – it's excellent, by the way! Regarding this specific article, I disagree. It is only partially written correctly, so it's important that you read the purchase agreement before writing the article. Yes, I am one of the buyers of Kiryat Gat vineyards for investment.Reply
Hello Guy, Thank you for purchasing the guide. I'm glad you found it helpful. I would be happy to read the purchase agreement. Would you like to send it to me? I understand that to read the agreement, one must pay 15,000 shekels. Does that seem fair to you? In any case, Calcalist did part of the service for us and read the contract. http://www.calcalist.co.il/real_estate/articles/0,7340,L-3652484,00.html Following the newspaper, the Ministry of Housing is also interested in a contract that on its face contains illegal clauses.I will soon prepare another article about Kiryat Gat, this time about residential purchases. Thanks again and best of luck. PomegranateReply
Hi Guy, I'm also interested in buying an apartment in this area. I'd be happy to consult with you. Rafi 0509209220Reply
Guy, thanks for the idea. Thanks to your "push," I obtained and read the purchase agreement. I found reinforcement for my words in it. http://www.effectivemortgage.co.il/1149/Reply
Hi Rimón, Good article, although I agree with most of it and I'm also not in favor of buying from a contractor as an investment. But it's important to remember that while you and I aim for current yield from day one, it's important to remember that this is not the only investment method, and that many work on appreciation-based investment, acquiring apartments from developers and selling them at the end of the project.This isn't our cup of tea, but it's important to qualify that this is also an investment method that can be profitable, and people have indeed profited and are profiting from it, not just in the last decade.Real estate agent on the roadReply
Hello realtor and thank you for your response. Beyond semantics (a cheap buyer, an expensive seller is a trader, not an investor), I think Most people who report profits with this method simply tend to ignore a large portion of the costs. Suppose we bought an apartment for one million and sold it three years later for one million two hundred thousand. Apparently, 20% is a profit. In practice? Fever. A. Financing cost based on an interest rate of 3% per year – approximately 93,000 shekels. B. Attorney's fees (twice) = 0.5% × 2 × 1,000,000 = 10,000 C. Brokerage fee for the second transaction = 2% * 1,000,000 = 20,000 (actually, it should be 1.2 million * 2%, but I was too lazy to recalculate everything from scratch).Total to date: 123,000 shekels. Changes and Additions: 50,000Total 173,000 Meaning from a "profit" of 200,000, we got to a profit of 27,000 Which is taxable, of course.The funny thing is that if the contractor had approached the same investor and said, "What do you think about selling apartments for me?" For 27,000 shekels for an apartment, there's a good chance he would have received a response like, "Ugh, I'm not a broker..." . And this is despite the fact that in a brokerage deal with the same profit, there is no risk.So yes, at first glance, a purchase deal on paper at a low price and a sale at a high price seems worthwhile. It is important to remember that in recent years The entire market rose sharply, there's no certainty it will continue. Always remember the contractor has much more experience than you do. And despite this, he prefers to sell today rather than at the higher price of three years from now.Reply
Financing cost is the interest you will pay over three years until the house is completed if you choose to make advance payments to the contractor, or alternatively, an estimate of the index linkage value the contractor has set for you if you defer payments.Reply
Hi RimonWe have to say about this article, two words "lips will kiss".If all investors behaved according to what you presented, we would see a more normal market.Most investors usually make all the mistakes you presented here in the article, and they even present themselves as sophisticated investors.Continue on this path for the good of all.Reply
The train schedule you linked to is not only irrelevant, it's also false. For example, there's a train station with a direct train to Tel Aviv in Be'er Yaakov and Rehovot. The schedule says "no station.".Reply
"One" - Thank you very much. I didn't know that. In addition, I noticed that the travel times from Qiryat Gat to Tel Aviv by train according to Gindi are shorter than what was measured (and published) on the Israel Railways website. In my opinion, it's embarrassing.Reply
They're comparing Kiryat Gat to Modi'in, lol. If Kiryat Gat were rebuilt with a serious mayor, then they could compare. In the meantime, the city is currently run by a mayor who has divided the city into factions, and it's a real shame because it's a city with vast potential, an industrial zone that is among the best in the country. But there's a world of difference between what the mayor is marketing and reality. In short, there's nothing to be proud of at all. The problem is the mayor publicly states he doesn't answer to anyone, so let him be.Reply
Good morning It seems you forgot one very important thing. For an investment apartment, you also need to check the possibility of renting out the apartment And what's the possibility of finding a good renter when the supply will be so large In short, the chances of finding a tenant willing to pay a rent that yields at least 51% are very slim.Reply
Hello Eli, The point you raised is an important one. I tried to write about various facts and pitfalls that mislead potential investors and not to make assumptions about the future. For the sake of argument, it's possible that many people will read this article or that for their own reasons, they will decide that this is a bad investment and not They will buy for investment, and thus the supply for rent will be small. What can be said with a high degree of certainty, in my opinion, is that a buyer of an apartment for residential purposes is willing to pay for the enjoyment of a new apartment. Suffering from living on a construction site: noise, dirt, unpaved roads, unbuilt sidewalks, etc. A tenant, on the other hand, will be much harder to find under these conditions. Thank you very much for your important response. Pomegranate.Reply
And here, in the context of Gindi - Karmey Gat, this is the first "roof agreement" signed with the state – which means that the first resident to receive a key will receive it after the state has finished building all the infrastructure – roads, parks, kindergartens, schools, sidewalks, etc.Reply
Hello Rimon,Certainly, the contractor's lawyer represents only the contractor, which is why it is important in any real estate transaction to hire a lawyer to represent only you. Gindi Spec has a lot of experience in the market as an entrepreneur, and therefore, as is characteristic of any business, he creates the contract that is most favorable to himself.As a lawyer, I can tell you that my main area of practice is not real estate. I hired a lawyer who specializes in the field, and who, as is appropriate for a lawyer representing a buyer in a real estate transaction, changed many clauses in the agreement.At the end of the day, Gindi and I reached a reasonable agreement (not the best, but reasonable under the circumstances) which I signed wholeheartedly. In addition to what has been said, I find nothing new in your words when you state that the agreement between Gindi and other contractors is a bad contract for the buyer.The only clause I saw in the agreement that contradicted the Sale Law was the clause regarding the deviation from the actual apartment size, which is also the first thing that was changed in the contract with them.Regarding the deal itself, like any deal, it's not about science but rather research, gut feelings, and circumstances. For six months, I was on a race to find an investment (not necessarily from a contractor) in apartments in Be'er Sheva or Haifa. However, due to my circumstances—work, a child, distances—it wasn't possible for me to run around every Friday or during the week. I know for a fact that I could have achieved a 61% return on investment by buying an apartment in Be'er Sheva or Haifa, but again, I didn't have the time to make anything concrete happen.We made a decision to slightly reduce the return we could get on the apartment but to create something that is suitable and good for us given our life circumstances. I argue that before rushing to put content out, one needs to think broadly and look at things from a bird's-eye view, not with a zoom-in that doesn't allow you to see the big picture and is even partially correct, which is a shame.Certainly, you can contact me. I'd be happy to help in any way I can.Reply
Guy, thank you for the detailed response. We agree that legal counsel for the client is necessary. My notes as an amateur reader and not as a lawyer (I always hire one before a deal) on the contract Of Gindi – http://www.effectivemortgage.co.il/1149Regarding investment through purchase from a contractor, it simply contains much greater components of uncertainty. I assume you've calculated an estimated return – I wonder how, when the rent is unknown (difficult to see ads For rent in a non-existent neighborhood), the price of the apartment is unknown (the price in the contract must contain the words "starting from...") And it's unclear what the region will look like and for how many years. If Kiryat Gat works for you in terms of travel distance, I think you bought an apartment in the city which in a month You can already deposit your first rent check from her. It will be a much better and safer investment.Reply
Sarah, there's no need for hysterics. Anyone who bought anywhere made a good deal. When the market rises by 15% a year, everyone makes a "crazy exit," as you put it. When the article was written, back in 2015, the recommendation was not to avoid investing. In real estate. The recommendation was to purchase a second-hand apartment and start renting it out immediately instead. Wait a few years and add attachments, changes, and additions. To conclude the recommendation was bad, it's not enough to show that a new apartment Then it became more expensive, but it should be shown that a second-hand apartment purchased at the same time It became less expensive. See examples I've already written in other comments. Good luck with everything.Reply
Hi Guy –I've registered for the Carmei Gat group purchase. I'm debating whether this is a good investment compared to buying a home elsewhere, like Rehovot (this would be my first home purchase, but I’m unsure if I’ll live there). (I have 400,000 NIS).If you have a recommendation, I would appreciate it if I could speak with you.Thank youOritReply
An apartment is a long-term investment, and this is a reality in Yavne where prices have jumped due to a new, quality population (and double Arnona compared to the rest of the city, which only adds to the quality of the residents...). And the truth is, the place is excellent.Reply
Prices have also jumped in Holon, Kiryat Ono, and Afula. In fact, in recent years "prices have jumped" Across the whole country. I wouldn't count on the continuation. By the way, if we follow your line of thought, a new, high-quality population improves the settlement and boosts prices., It's still better to buy two used apartments in Kiryat Gat and start receiving rent in a month (and later enjoy a "price jump") compared to An apartment from a contractor where you will (possibly) receive rent in two years, and meanwhile the price in the contract will be several [units] away. Tens of thousands of shekels from the price you will actually pay. Evidence of the greater risk in a new apartment can be easily inferred. From the purchase contract. Gindi's contract includes about 60 pages. A second-hand purchase contract typically has about one-sixth the number of pages.Reply
I am interested in buying an investment property, a 5-room apartment in Carmi Gat for 780,000. I have 300,000 in cash. According to what their agent described, I am supposed to pay 520 for registration fees, plus 1.45% plus VAT to their lawyer, Zahavi. On the day I am called to choose where I want the apartment, I am supposed to add another 20,000. This sounds okay to me. I am not a trader, but looking to invest to gain profits in 3 years. How does this deal look to you? I would appreciate a response.Reply
Two questions: Why do you think "you will reap profits for another three years"? B. Why don't Gindi, who have much more experience than you, wait three years for greater "profits"?I think I gave a pretty detailed answer to the question above, but if I had to answer in one word, I would say no. Absolutely not.Good luck.Reply
Where is the connection to Gindi? He didn't say he buys specifically from Gindy. It seems like he does mean Gindi, but it doesn't make sense because there are no 5-room apartments for 780,000 in Gindi.So Oren, maybe you can tell us if you really meant Gindi or someone else?Reply
I am interested in purchasing an apartment from a contractor in Carmei Gat. I would appreciate it if you could send me the contract, as I do not understand.Reply
Hello Avi, After reading the entire article, do you still want to purchase it? I need to work on my persuasion skills :-).Gindi's people are selling the contract for money, to be exact. So, there are actually people who pay thousands of shekels just for the right to see a draft contract. In my opinion, it's strange, but you can't argue with the market.I assume the contract is protected by copyright and I really don't have free time to deal with Gindi's lawyers. Therefore, unfortunately, to read the contract you will need to contact them. Good luck.Reply
Question for Pomegranate,How many apartments do you own? At what age did you buy your first apartment? It’s easiest to take away hope from others!Reply
Hello Moshe, I own 5 apartments. I am now looking for another investment. I bought my first one at age 28-30, I don't remember exactly.It's not the easiest to deny others hope, it's the easiest and most financially rewarding. This is giving false hope. For example, I could state that it is an excellent investment and offer advice. To anyone who wants to invest there. Saying it's a bad investment could hurt my livelihood.To be honest, I have no intention of hurting anyone with hope. I encourage many to invest and I think that it requires not a large amount of money. I think most readers of this page can do it and should do it This. I think if you invest, you should do it in a way that brings maximum return, and a new apartment from a contractor is a completely different matter. Much hope and much success to you.Reply
Willing to bet on it 10 to 1? And note that this is an intervention with a very high chance of success because You have the ability to influence the final price, and I don't. 🙂And beyond the comic relief, I don't understand how the figure you mentioned raises or lowers it. The arguments above.Reply
An apartment costing 650 NIS—add 5%—the price of an apartment can vary... Add the 2% index; it will take about three years to build an apartment... Additional expenses, a mortgage, loans, and of course interest. In total, it could easily reach 800 NIS or more... Think very carefully about the final price of an apartment.Reply
If I have about 600,000 NIS, what do you suggest instead of Carmei Gat? Where to buy and invest, I would be happy if you answered me.Reply
Hi Itzik, I think it's more accurate to talk about a principle rather than a specific location. The principle, in my opinion, is that boring deals lead to greater profits. Meaning, it is indeed much more "glamorous" (courtesy of a sophisticated marketing system) To buy a new apartment. It is more profitable to buy a used apartment in a dull place. It doesn't matter much to me where you choose to purchase. There are many considerations for this choice. And I cannot advise without knowing anything about you, but it is important that you adhere to the rules of thumb for calculation. Return on the present basis, not on the basis of future dreams. Many successes.Reply
Hello, Not everything in life is black and white. There's also gray. There are investments whose embedded profit stems (or will stem, in the case of Carmel Gat) from expected appreciation. No one knows for sure what the price increase after occupancy will be, but we are looking at prospects and potential. The expectation is an important component that pushes investors specifically there. In a settlement where there is a developed industrial zone like Kiryat Gat, where Intel is currently building a new factory that will employ many workers, there is a great chance that the workers will prefer to live nearby, and as a result, there will be demand. Correct. In the beginning, there will be an oversupply, and it might be harder to rent at a good price. However, every apartment has its tenant, and sometimes the quality of the tenant is even more important than the rent amount (and I've already been hurt by bad tenants in my life). If everyone did the accounting as you suggest, no new settlements would be established because if the builders relied solely on residential buyers, their establishment would take much longer.Reply
Hello Udi, and thank you very much for your response. Surely not everything in life is black and white. However, when a massive marketing attack highlights only the white and sometimes Sometimes it whitewashes the black with facts that it carefully calls "inaccurate." , I felt the need to also give a bit from the other side.When building on "value appreciation," any investment in an apartment in Kiryat Gat, a Teva stock, or a store can be justified. In practice, those who build on appreciation tend to forget the possibility of depreciation. Calculating the costs is also often Many suffer, as I mentioned above.Personally, I evaluate an investment based on the data at the time of purchase, and if there's an appreciation in value, that will be a bonus. Regarding the industrial zone, which is entirely Intel. It seems that Gindi also doesn't really trust Intel's pulling power, and therefore Instead of emphasizing the abundance of jobs in the area, they are falsely emphasizing (I couldn't hold back this time) the 35 Minutes from Tel Aviv.Your words about calculations being a hindrance in establishing settlements are interesting. A. I think it's highly recommended to do calculations before investing all my savings + a loan for many years. Those who want to give charity, in my opinion, there are more suitable institutions for it than contractors.B. Building new communities is not an end in itself. It is a means of meeting demand. In any case, if there is no demand, then there is really no need for a new community. A price increase of over 100% over the past decade suggests that there is likely demand, and I do not assume that all of it stems from people who are not thinking things through.Thanks again, PomegranateReply
Hello Yoel and thank you. I am not familiar with the vineyards of the Sharon. The fundamental points I wrote about purchasing an apartment from a contractor for investment purposes, not for living in, are: In my opinion, they are correct for any apartment from a contractor. From the investment, I want you to bring me a return next month, not in two years. Investment should be at a known price, not at an X price to which countless Ys will be added. 3. A transaction with a contractor includes a large component of knowledge disparity between us and the contractor (to their benefit), as well as a component of various advertising manipulations that easily confuse us.Reply
Thanks for your response! The principles you've written are practical for virtually any new project. "Karmey HaSharon" is Gindi's new project in Kfar Yona. Ostensibly, it may have a better future return than "Kiryat Gat". In the short term, I accept your position on renting starting from the first month. However, in the long term (5 years), won't tenants prefer a new area with better infrastructure, new educational institutions, and more?
Hello Joel, As an investor, you shouldn't be concerned with "whether tenants will prefer a new area with better infrastructure." You should be concerned with whether they will pay more each month and how much. Beyond that, the infrastructure can be better and can be (at least in the first few years) much worse. A person who buys an apartment from a contractor is willing, after paying so much money and designing an apartment to their taste, to live for years on a construction site, as often happens in a new neighborhood. Would a renter agree to that? I wouldn't. New educational institutions? Do you have a contractual commitment from the authority that there will be such institutions? Maybe they will be of an educational stream that doesn't suit you (state religious for secular or vice versa)? Why did you decide that the target audience you want to work with is specifically families with children? Personally, I prefer young people without children over families with children as my clients (renters).Secondly, the composition of the neighborhood in a new neighborhood is a big unknown. In the first one, there is a neighborhood that was almost entirely bought by foreign investors. The neighborhood is almost completely deserted, and it wasn't worthwhile for anyone to even open a grocery store there.
Hello I read eagerly, including the correspondence below. Still don't understand why it's right to hold even a few investment properties? Does the tax on rent from 5000 NIS make it worthwhile?Reply
Hello Amir, and thank you for reading. Investment is typically a matter of alternatives. You will pay 25% in taxes, plus buying, selling, and custody fees, on your stock market investment. I pay 50% in taxes (income tax + Social Security) on my earned income.Despite other investments, you cannot get foreign currency (from the bank) as cheaply as for real estate investment. And so, effectively, to profit from money I don't have.In my opinion, diversifying income through real estate assets is a good idea.Reply
Hi Rimmon,First of all, I saw several cases where investors who bought new apartments made a very good profit once the building was constructed. Second, what about increasing equity? Why look for returns from day one? Why not try exits? I read here that you own 5 apartments, meaning you have rental income... You don't get rich from rental income unless there's property appreciation, and it doesn't matter if it's from a contractor or a second-hand sale. In other words, the big profit in real estate is from the appreciation of the property's price, not from the yield. In second-hand apartments, wear and tear is usually higher, so warning about contractors who don't build well is on the same level. Have you ever bought an investment property from a contractor? And what's the interest in paying Google for advertising, why not buy from this or that source? I personally bought several second-hand apartments for investment, and it was precisely my first developer apartment for investment that I purchased in Kiryat Gat. I would appreciate an honest answer.Reply
Hello Idan and thank you for the read. "I saw a number of cases" is not a work plan in my opinion. I've seen several cases where people have won the lottery. This is exactly the cognitive bias that causes the advertisement with Araela. Makes sense to be so efficient. A bet is a bet, and I do not encourage gambling. This is even more true when buying for investment in a place where, according to publications Over 30% are ready to do exactly what you want to do. Won't such a large supply cause a price drop? We'll see. You bought it with no purpose of living there, are you sure there are so many Will they want to live there?I'm not looking for "get rich quick." The desire for easy riches often leads to poverty. I am looking for financial stability, financial security, and the ability to fund my life without the obligation to work. The 5% can perform quite well if managed properly.Wear and tear is a function of money. My experience shows the opposite of what you wrote.I would gladly hear a summary of the deal in Carmei Gat compared to your second-hand deals in the meantime. Two to three years when the deal ends, meaning when you sell.Best of luck and thank you again.Reply
Hi Rimmon,No one is looking for a gamble, especially when buying a new apartment from a contractor at a below-market price in Kiryat Gat. Regarding wealth accumulation, in my opinion, one-third of your total capital should go towards exit investments to increase your capital. While two-thirds will be built on return. It is known that to buy real estate, money is needed. As for who will live there? High-tech companies are moving there and driving up residents’ wages, which means greater purchasing power. And satellite cities—and the suburbs in general—always tend to catch up to the center in terms of prices; Be’er Sheva has seen a 100% increase over the past six years.Thank you for your answerReply
Hello Idan, I don't see a question in what you wrote, so I don't know what to answer. But a few notes: A. What does "below market price" mean? If this is the price at which an apartment is sold, then it is the market price, unless you prove, for example, that a particular contractor who is in difficulties is selling at a price significantly lower than his peers. In such a case, the low price will come with high risk.I don't want to be cynical about the "Bahad City" project, but I recommend looking at a map. Bahad City is located south of Be'er Sheva. Those who will serve there will be able to choose between private housing neighborhoods adjacent to the base in Yeruham, living in the large metropolis of Be'er Sheva, or in an established settlement like Omer. What reason would they have to travel a long distance specifically to Kiryat Gat?C. "The periphery is catching up to the center in terms of prices," just as I approach the horizon in a boat. In other words, the periphery never catches up to the center in terms of prices. It’s just that in recent years, prices have risen significantly in both places. So when is it better to buy Teva stock—after a price drop of 30% or after a price increase of 100%? Accumulated experience with stocks shows that the public chooses the second alternative – buying after rises and selling after falls. Or in other words – buying high and selling low. Stock price drops and the hysterical repayments surrounding them show this well.So, if the price increase trend of the last decade continues for another decade, it's clear that any investment – Kiryat Gat, Yeroham, Tel Aviv – will pay off. Personally, I am not building my asset portfolio this way.Good luck.Reply
Hello Gil, Thank you for your reply. I have a deal to offer you. What do you say to buying an oven from me? Pay me 2000 shekels now and some amount in the future. I will bring you the oven in a month or in six months. During the coming months, I may request additional payments of an unknown amount. There's a high chance I'll replace the model without asking you. And most beautifully, since I am your partner, you cannot have any claims against me. Buyer?Reply
Hello Pomegranate, Do you think it's worth buying an apartment now, or should I wait another year or two? What would you do? Thank you very much, ShirleyReply
There's no need to rush and buy an apartment in Carmei Gat. The project is still in its early stages. It's advisable to wait and see how the infrastructure and development unfold there. It's not just The final price, if it is low, requires investigating the reason for the low price. To avoid mistakes, it's advisable to wait. More buildings will be constructed there, and they will likely be the ones to block the view and sun from the initial buildings. There is a high chance that apartment prices will soon be on a significant downward trend.Reply
Hi Rimon! The article and the comments are really fascinating, but I'm confused! Where is it really worth investing? I am interested in buying an apartment as an investment. I have 150,000 NIS + a 500,000 NIS loan from the bank that I can pledge on my apartment. What can you offer me? Thank you in advance RuthReply
Hello Ruth, Location is the last thing you should worry about. Almost everywhere there are good investments and bad investments. I suggest we focus first on investment principles and aligning investments with your long-term plan. And only then look for a place to invest. I'd be happy to chat with you about it. Best of luck, PomegranateReply
Hello, PomegranateI need a little guidance. I have NIS 770,000. NIS 270,000 was used to purchase an investment apartment in the center which yields 4%. I have 500,000 left. In consultation with my real estate lawyer, who herself has invested in Carmei Gat (these are adjacent, approved land parcels) There is a tender for a plot of land in Karmit Gat that has been zoned for construction, which will cost approximately 500,000 NIS, for example Is it worth it for me to invest in land and wait for land prices to rise in 3 years when all contractors start building? The price of land will go up and it will be possible to make a profit. It should be taken into account that this is money I have, and it's for an exit investment. Is it worth it for me to buy???Or look for another investment property? Keep it even with a 4% return I would be happy to receive an answer. Thanks in advance. I hope I made myself clearReply
Hello Likhan, If I had 770,000 shekels to invest, I would buy two investment apartments. On the other hand, you're not me, and I don't know anything about your plans for the future, The percentage of capital you intend to invest out of your total assets, your future plans, etc. Without all of these, it's impossible to give you a smart answer.It’s important to know that those who "wait for land values to rise" may also experience a decline in land values Especially when you factor in financing costs, taxes, and other expenses. There are also financing costs When you have all the money (for the sake of argument, you could have earned 41% per year elsewhere).To get the full picture and provide you with comprehensive advice, I invite you to visit my office in Petah Tikva To the meeting.Lots of success, Pomegranate.Reply
Hello,Carmey Gat vs. Harish. Which is better? In terms of development, Harish is at a much more advanced stage, so some of the drawbacks present in Karmit Gat are disappearing.Thank youReply
Hello Eliyahu, and thank you for your response. I don't know what you're looking for, so I don't know what would suit you best. As an investment, as I wrote, I would not invest in either of them I am buying a built apartment in an existing city. Good luck,Reply
It would be interesting if, after 6 years, someone summarized what actually happened with the Carmei Gat project in terms of purchase and rental prices, and demand. Of course, even if it succeeded or not, it doesn't contradict the risk-reward calculations that need to be done at the beginning.Reply
Hello Chaim, I completely agree with you. It's really interesting. I invite you to check it out and write here. Good luck with everything, PomegranateReply
I don't have time for that. I just thought that since so many people mentioned above that they had bought an apartment in this project. After all, they know the figures and can write them down here.Reply
I'm glad to see that, contrary to what the author wrote in 2015, those who actually bought it earned a return of about 801%! Feels like the neighborhood is booming and the last word hasn't been said yet. Looking to invest in Carmey GatReply
This is not contrary to what I (the writer) wrote. For it to be contrary to what I wrote, it's not enough to show that the price has increased. It needs to be shown that it increased more than a used apartment, because that was actually the recommendation. You didn't provide any figures, so it's unclear how you calculated the return. Since I'm not familiar with Kiryat Gat, I assumed that Tzahal Street is an older street and randomly checked 4-bedroom apartments. The increase in value is approximately 60%–70%. Add to that the lower risk, the fact that if you look for a second-hand apartment, you can also buy an apartment below market price and not choose randomly as I did now, and of course the fact that the risk is much smaller And I stand by my recommendation from 2015. Or in other words, it's okay to pat yourself on the back that in 2015 you bet correctly, but if you face a similar decision in 2022, I still think it's better for you not to take that bet again. Good luck.Reply
Reading what you wrote in 2015 about Carmei Gat, one would expect you to stand in front of all those who bought an apartment there then for less than a million NIS and are selling it today for almost two million... one of the most beautiful and developing neighborhoods.Reply
Hello to you, Shlomi, I don't know what you mean when you say you expect me to "stand up to..." And I believe I've already answered that in previous comments. Just because someone bought for less than a million and sold for two million doesn't mean they made the best deal they could have. If he bought from a contractor for less than a million, he actually paid much more than the contract price: indexation, changes, additions, and financing costs. It's not enough to check how much someone who bought in this neighborhood profited. You need to look at what would have happened if they had actually taken the recommendation and bought. In another neighborhood in the city. Let's take a 3-room apartment in the city center as an example. In this area, 3-room apartments were sold in 2015 for prices between 500,000 and 700,000 shekels. Deals in the same areas today are being made at prices above 1.5 million. This means it's not double the price as in Carmei Gat, but closer to triple. This is in addition to roughly two years during which one could get Rent vs. a contractor's apartment, with no additional costs and greater future appreciation potential. Regarding the neighborhood's beauty. Excellent. Glad to hear. Investment is measured by financial values. It's absolutely possible that when there's a successful neighborhood, it causes the appreciation of other neighborhoods. As I showed in the example above, the appreciation of the other neighborhoods is even greater than what this neighborhood appreciated. Good luck with everything.Reply
I bought an apartment in Carmei Gat for 850,000 NIS. I just sold after the dip at 1,650,000 NIS. (Note, whoever sold a year ago sold for 1,750,000 NIS)The apartment was rented out the entire time at excellent prices. It was clear to me that at first the rental prices would be lower and would rise later, and I acted accordingly.In my purchase, I hired a lawyer for 2,000 NIS who gave me adjustments and improvements to the contract. I'm glad I didn't see the thread at that time.I don't know if it was the best investment in the world at that time, but it was definitely an excellent investment, and there was no serious reason for it not to succeed.Reply