Thinking about investing in real estate in the US or elsewhere? You have come to the right place.
In this article we break the process down step by step: where to start, what you need to know and what to watch out for, so that you too can buy an investment property abroad correctly and safely.
The overseas real estate market offers different investment options suited to different people, but alongside this advantage there are also risks and drawbacks.
So what is real estate investment?
Real estate investment, income-producing real estate and/or development deals are an investment channel whose aim is for investors to earn a monthly or annual return by renting out the property (or building a new property) in which they invested their money, or in another form. Different types can include investing in apartments for rent, or investing in offices, retail or industrial space leased to businesses or companies that pay rent.
The differences between investing abroad and investing in Israel
The common view is that properties abroad may generate higher yields (returns) than those in Israel, and that investing in real estate abroad pays off better. Bottom line, this is true, but not precise.
The average yield on real estate investments in Israel is 2-4% on average, compared with much higher yields in various countries in Europe and the US.
On the other hand, when it comes to real estate abroad, you need to add to the calculation additional costs of managing the property, possible flights to the property to carry out inspections and handle matters, and of course taxes (depending on personal tax and on the deal structure - which is why it is very important to make sure the deal is structured correctly from both a legal and a tax perspective), and a greater risk that your property will stand empty and unlet.
Caution - investors abroad
First, when entering a real estate deal abroad, always remember that this is a different playing field from the one we know. It is a deal carried out remotely (through a local developer and/or a developer on the Israeli side). In most cases, the property is bought by a purchaser who has never visited (and may never visit) the property itself.
Second, there are many gaps in the legislation relating to investments. Each country has different tax laws (as well as treaties between Israel and many different countries) on the purchase of property, and different arrangements apply to land and to rental laws. Every deal in a different country is an entirely different deal, involving a whole world of different legal concepts that must be examined and checked in order to complete a successful deal.
In addition, you must also take into account various cultural gaps that may undermine the deal, as well as securities laws.
It is very important to beware of advertisements and offers that look too good, and to examine every deal and opportunity in depth and thoroughly - especially when it comes to real estate deals abroad.
Various factors, including the gaps in information and transparency between investors and the companies that manage the investments, are enormous. In this way, companies often manage to sell investments without investors asking the right questions.
It is worth noting that real estate investments abroad are an excellent channel. However, you must not give up close guidance from a lawyer who specialises in real estate and investments and who will protect your rights.
Investing abroad - how to start
It is very important for anyone interested in a real estate investment to work closely with a lawyer who will accompany the deal from start to finish.
An experienced lawyer who handles real estate deals in Israel and abroad should have experience and knowledge in real estate in general, but also in investments abroad specifically. Experience in the destination country where the opportunity is located is an advantage.
Together with your lawyer, you can be sure that you are acting safely and increasing your chances of completing a successful investment deal. The lawyer's role in guiding a real estate investment abroad is varied and changes according to the stage of the investment.
After that, there are 2 main stages:
- The purchase / investment stage
- The management stage
Bottom line
Real estate investments in Israel or abroad are an investment channel in every sense. However, since this is a complex field that requires specific expertise, it is not advisable to start such a process without legal guidance from lawyers experienced in the field.
