About a month ago, I published an article about Purchasing an apartment for investment in Kiryat Gat. This article has become one of the most read articles on the site. Many commented on the article. There was also a comment stating, if you read Gindi's purchase agreement, you will understand that you made a mistake.I don't usually respond to baseless comments. But, if I'm offered something as interesting and challenging as reviewing a nearly 60-page apartment purchase contract, who am I to refuse all this fun?First of all, thank you very much to D. (name kept private) who consulted with me about a mortgage for Carmei Gat and agreed that I would photograph the purchase agreement.Perhaps because I am not a lawyer, I was not very surprised that there was nothing in the contract that could turn an unviable investment into a viable one. To tell you the truth, my opinion against purchasing, at least for investment, in Karmey Gat has strengthened after reading the contract.I'm happy to share with you some points from the purchase agreement. As mentioned, I'm not a lawyer, and I highly, highly recommend hiring one if you intend to buy an apartment from a contractor. The contractor's lawyer represents Only You are the contractor. There are so many "whereas" clauses, and no mention of construction according to a building permit. An additional "whereas" clause must be demanded, stating that the construction will be in accordance with the valid building permit. Think it's self-evident? Think again. For example A tower in Petah Tikva whose occupancy is delayed due to a deviation from the building permit (too few parking spaces). Here we are reaching the most creative stage. In an article about Buying an apartment from a contractor I mentioned that an apartment from a developer is an unknown product with an unknown price. Let’s start with the unknown product. Note that the apartment’s square footage may be reduced by 5% without compensation. The Sale Law allows for 2%, but we won’t get bogged down in minutiae like Israeli law. Another issue is the inclusion of common areas (stairwell, lobby, elevator) as part of the apartment’s area based on their proportional share. In other words, if someone buys a 100-square-meter apartment and thinks they’ll be mopping 100 square meters, I have good news for them. It is very likely that they will only have to mop 80 square meters. Of course, this means they will also only be able to use 80 square meters. To illustrate, a standard room measuring 3 by 4 meters is 12 square meters. In other words, 20 square meters is a significant area deducted from the apartment for those unwilling to sleep in the stairwell or lobby. The buyer undertakes to agree that things requiring repair in the apartment will be fixed after handover. This is important. What is missing? A large portion of readers rent apartments, I assume. Every lease agreement includes a clause for repair timelines. Heaven forbid, I have had more than one conversation regarding the obligation to fix an air conditioner within 3 business days and not five as I requested. Nevertheless. Gindi, on the other hand, does not commit to a repair timeline. Apartment renovations I’ve spared you the trouble of looking up the relevant section of the contract. In great detail, the contractor states that any changes will delay the apartment’s delivery by up to one month, and that this delay will incur costs for the contractor amounting to 0.51% of the apartment’s price (5,000 shekels for a one-million-shekel apartment).It is very important to add to this section the determination that at the time of the change request, the contractor will specify in writing the delay in delivery so that the client can decide whether to request the change or not. Of course, Gindi is just an example. In this case, I actually received their contract. Personally, I've never bought an apartment from a contractor, but I've already read several contractor contracts. The points above are not unique to Gindi.
Hello Rimon,To be honest, you disappointed me with this article. I follow you regularly and learn a lot about the mortgage issue. In my opinion, this article was written with the goal of "releasing" an article to the public. At its core, the article is wrong and even creates an unjustified scaremongering campaign for potential buyers, whether they bought an apartment from Gindi or from another contractor. I will explain my words.Regarding the "Hooeyls," there is an early purchase addendum to the agreement, which is Addendum Y. Regarding the apartment's area: Reading agreements is excellent, but coming and writing based on reading the agreement incorrectly is another matter (or perhaps also based on a similar article on Ynet). If you read the whole paragraph, you will see that it explicitly states "except for those specified in sections 5 and 6 of the technical specification," where the area is calculated according to the Sale Law. Therefore, the things you wrote are half-truths, stemming from a lack of macro-vision of the agreement. Consequently, you said it well, it is important to go to a lawyer, so that they do not mislead and/or frighten potential buyers.Greetings, Guy Ha'elyon, Attorney at Law, LL.M.Reply
Hi Guy, First of all, thank you for the kind words in the more flattering part of your response. I am very happy for the opportunity I have to pass knowledge onto others so that they can navigate their steps in a way that is better and enjoy greater economic prosperity.Getting down to the nitty-gritty, what you're mentioning in one place is written like this, but in the appendix it's written differently, which negates what's written in the section above. It reminds me of Gindi's advertisements (quote from memory, I'm too tired to look at the screenshot): An apartment at a target price. At the bottom of the page in invisible font – an asterisk clarifies that the apartments are not part of the target price program.I remember the joke about the newspaper "Ha'Olam HaZeh" that used to come out in our area: Main headline: "Is the Defense Minister using drugs? Continued on page 12". Page 12 bottom: "No.".So, okay, their lawyers are talented and manage to phrase everything in a way that's legally sound. What about a little ethics? In your opinion, is it reasonable that a person whose native language is Hebrew and who has over 12 years of schooling would not be able to understand a 60-page contract? I don't think so. And I believe that a large part of the issues listed above are written in a way that will intentionally make the poet's intention difficult to understand. Let the buyer beware.Reply
Hello Rimon,I didn't understand the "Gindi advertisements" point because the font size is the same throughout the agreement. If reading an agreement summed up to 12 years of schooling, lawyers wouldn't be needed. In any case, the agreement can be understood from its text. A lawyer will help you understand the meaning of every sentence, just as I tried to explain at the beginning of my statement.True, the buyer is shining, but slowly the seller's shining trend is also penetrating.Greetings, GuyReply
Pomegranate, I am happy to see that you have taken time from your schedule to clarify and discuss matters here. I am puzzled about one thing; I bought an apartment here abroad about a decade ago and I remember how the banks here were meticulous about not giving a mortgage without knowing that a significant percentage of the apartments would be purchased by those who intend to live there themselves (owner occupied). Regarding Carmel Gat; is there indeed an arrangement there that allows these "investors" (those who don't really need a place to live) to come and purchase alongside a family with children?GreetingsReply
Hello Perez, and thank you for your response. It's nice to see that I'm being read even from afar.In Israel, banks do not have the ability to know what percentage of buyers intend to live in the property and what percentage are buying to rent out. Obviously, that's not part of their considerations. I think another difference is that buying an apartment on paper is a patent that is more common in Israel than abroad.the preference for the homeless over investors is carried out in Israel by a property tax mechanism that causes investors pay more money for that apartment than those buying a first apartment. In my opinion, this is a more correct method. Just like when there is a shortage of water, as long as it is not an emergency situation, We don't tell people not to fill a pool, we just tell them that above a certain consumption level, they will pay more for the water.Reply
Thank you, Pomegranate But it's a miracle I didn't see everything you were writing 9 years ago. Because I purchased from Gindi, and for an investment of 850,000, I hired a lawyer for 2,000 ILS who added an appendix that improved several significant clauses, and hundreds of other buyers did the same. It's not hysteria.The company fulfilled all its obligations throughout the construction, everything was as smooth as could be. The apartment has been rented out the entire time since it was occupied, initially at a low rent, and after two years the price jumped.I am now selling at 1,650,000, a profit of about 700,000 NIS.,Thank God I didn't see your articles and those of some other 'wise guys' in the press who never examine themselves after a few years, who wrote threatening articles about 'a ghost town in Carmei Gat" and how bad the investment was.Reply
Thanks for the reply Avi, I'm not sure what you're describing is a miracle. Please note that the recommendation was not to buy in Kiryat Gat, but rather, the recommendation was that if Kiryat Gat is chosen for investment, a better result can be achieved with less risk by buying a second-hand property in Kiryat Gat. In other words, it's not enough to show a large profit from a purchase; you also have to show that another alternative would have resulted in a smaller profit. I checked a second-hand 4-room apartment in Kiryat Gat, in the Tzahal neighborhood, 9 years ago, in 2014. Prices were around 600,000. Source: https://www.gov.il/he/service/real_estate_information According to Madlan, prices today are around 1,500,000. On one hand, you stated a profit of 700,000 (not entirely accurate, as you omitted various purchase costs such as legal fees, construction inputs, utility connections, etc.). On the other hand, if you had read the article 9 years ago, you would have profited about a million. In practice, the gap is larger because with a second-hand apartment, you would get another two years of rent, and as mentioned, the risk in the transaction was smaller. I'm happy everything went smoothly with your purchase, but that doesn't mean there's no risk. Similarly, I'm sure you don't cancel your car insurance after every accident-free year because you understand that even if nothing happened in a particular year, the risk still exists. Even if the deal went smoothly, and that's for the best, it doesn't mean it wasn't a higher-risk transaction. In any case, may you continue to succeed and read economic content from me, or anywhere else. There is no doubt that knowledge improves results.Reply
One more thing, I know the market in Kiryat Gat. What you checked at 600,000 and today at 1,500,000 is not the same apartment. If you check the apartment's standard, you'll see that the profit is smaller.Reply
I think you should figure out three things *with yourself* so that your next investment will also be very successful, or even more successful. If you'd like, sharing here would be nice. 1. If the current investment was so good and the prices rose in a way that satisfied you, why did you choose to exit this investment? It's possible it's because you need the money, but if the reason is different, I suggest you clarify it. One of the mistakes investors make is thinking that after a successful deal they have a "sense" and if they do more deals they will profit more. The reality is usually the opposite. 2. Why did you choose to research the neighborhood you decided to move out of after you completed the transaction? Why is it so important to you to show that a stranger, who you have no idea who they are, is wrong when you are right? What does it matter to you? Good luck with everything.Reply
Aviv, good morning For your questions I only sold because I'm about to do extensive renovations on my apartment. I sold with great difficulty, I have a fantastic tenant there who takes care of the apartment like it's the crown jewels, and pays a year in advance by check. An excellent tenant from the moment I started renting. I didn't choose to look for information about the neighborhood, I know the area like the back of my hand, regardless of the current sale. 3. People make mistakes. Many who saw your things back then didn't buy and lost money. Not everyone understood all your apologies today. At the time of reading 10 years ago, "the intention was to buy a second-hand apartment." Most understood the explicit negation and less the implication of buying in other places and products, and they return home half a year later with money lying under their floorboards, and they refrained from buying altogether, and lost out. It's very important to emphasize that all those who *warn us all day long* about this and that and everything that moves, saying everyone is a thief and a robber, have many mistakes, and that whoever doesn't invest carefully won't profit. I remember myself with those terrible feelings that perhaps I didn't do enough to secure my money at that time, I remember myself after a cheap and slanderous article in Bizportal about a 'ghost neighborhood,' an article that after a short period turned out to be nothing. And other articles that make it easy to slander a city that doesn't know how to respond enough in the media. Therefore, it is important for me to bring the truth and justice to light, and to avoid causing financial damage to others, to say the following: Be careful and beware of questionable investments (and I also know how to lose, yes it happened to me, but that won't stop me), but also know when you are taking minimal risk and don't get excited by every writer as if you are just putting your money on the line, etc. Otherwise, your cash will be lying around under the floorboards and its value will be eroded. And to you, Rimmon, I say and advise, if I may, write in every article a negation, more words that give an explicit alternative and not just an implied one. Thank you for liking helping people.Reply
If you didn't choose to search for material out of curiosity, how did you come across this ancient article? I have a feeling you only read this article, which is a continuation of a previous article (link above). From that same article: Past events – everyone knows a friend who bought an apartment somewhere nobody expected, and suddenly its price jumped. Of course, Gindi also knows such places, which is why their marketing approach resembles Modi'in. In practice, those who bought an apartment in Modi'in truly benefited from a sharp increase in their apartment's value. Is this because they "knew how to identify an opportunity"? Absolutely not, the entire market rose sharply in the last decade. This was true in Modi'in, Kiryat Ono, Holon, and Afula. To the same extent, one could say that what was will not necessarily be, and therefore, at least in terms of investment, the likelihood that an apartment's value will increase more in Kiryat Gat than in Petah Tikva is not at all clear. Thank you for your kind words and good luck with everything.Reply