Once you’ve decided to invest and leverage your money, the question arises: what is the best investment for you?
If you’ve concluded that real estate is the answer, here are some advantages of investing in the USA in particular:
1. Initial Capital: After utilizing all available loans and savings, you might find that the amount is insufficient for even a quarter of a property in Israel, and the mortgage will only cover the interest on the loans. Abroad, it is possible to invest in real estate with a low initial capital!
2. High Returns: Real estate abroad yields double the returns. The land in the Holy Land is limited and highly demanded, whereas in the USA, the area is vast, and despite the demand, you can find good properties with high returns through the right connections.
3. Tax Benefits: In the USA, there is a concept called Depreciation. Depreciation is a significant factor recognized by the IRS. The advantage of depreciation? You can deduct 5-10% of the property’s annual value, significantly reducing taxes. Moreover, such investments often come with significant tax benefits, and in some cases, there is a tax treaty between Israel and the country where you invest, protecting the Israeli investor from double taxation. Currently, many countries have tax laws friendly to Israeli investors. In Israel, you pay a purchase tax when buying a property and a capital gains tax when selling it. In the USA, there is no purchase tax, but there is an inheritance tax. What does this mean for the Israeli investor? Probably not much, if you follow a few rules. So far, the incidence of inheritance tax on foreign real estate investors has been almost non-existent.
4. Flexibility in Property and Investment Type: You can choose whether you are interested in a short-term or long-term investment, joining a purchasing group, and more.
5. Strong Rental Market: The rental living culture is more common in the USA than in Israel. Many Americans relocate due to work and studies and live far from their parents. The phenomenon in Israel, where young people return to live with their parents for extended periods, is not an option for most Americans, making the rental market stronger and more stable than in Israel.
6. Risk Diversification: Investing in the USA opens up unique and profitable projects that an individual investor might not be able to access on their own, by partnering with other investors. Investing in group projects and through a company and professionals allows for risk diversification across many properties and sometimes even multiple projects, an option not available to most private investors in Israel.
7. Leveraged Financing Options: It is easier for a private investor to obtain financing in Israel, although the required equity today might be much higher than that required in the USA. In the USA, it would be difficult for an Israeli citizen to get financing as a private investor, but investing through a company allows the investor to benefit from the financing the company takes, thus effectively obtaining financing easily in the USA as well.
Anyone who wants to make one or two real estate investments and is not interested in developing a career in the field would be wise to partner with experienced and responsible professionals and avoid independent entrepreneurial attempts. Real estate is a profession that requires knowledge, experience, and expertise, especially when done remotely. Don’t pay for mistakes!
8. Low Dollar Exchange Rate: Now is the time to buy! Your money is worth more!
So far, you’ve understood the advantages that the US real estate market offers. However, a smart investor must know the risks versus the opportunities and understand the disadvantages of such investments:
1. Distance: We all believe that nearby properties are convenient for us and possible to manage and supervise. Any management issue can lead to a decline in property value and returns.
2. Language and Foreignness: It’s challenging to understand the language, we lack knowledge of local operations, difficulty understanding the market, and more. Usually, there is no one to bridge these gaps.
3. Commission and Dependence on Third Parties: Typically, to facilitate the deal to you, you will have to pay a commission to a third party mediating between you and the developer, sometimes reducing the deal’s profitability. Additionally, they handle negotiations with the developer, leading to less transparency and accessibility.
It’s true that the considerable distance and dependence on a third party in managing the investment make many Israeli investors feel less secure and in control. However, as time goes by, the world today is becoming a global village, and new ways of remote communication and monitoring are emerging, even in real estate. Thus, the American conditions of high returns, favorable tax options, leveraging opportunities, availability, and low initial capital are a special message for Israelis!
And more than that!
What if we told you that in “distant” America, there is a local developer, Israeli like you, who speaks and understands your language, reflects all the data about the deal, and is the first tool to operate and secure the best and safest deal for you? With accessibility and personal treatment, who also manages the properties and joins as a partner, you can achieve incredible leverage and reach the coveted financial freedom?
Nice to meet you – we are Haya and Adel, schedule a consultation with us to tailor the perfect deal for you!
