The question that concerns any estate investor in Israel and abroad is where to invest – should he prefer the local market or go sailing in the unfamiliar waters of international real estate markets. The Israeli investors receive a plethora of information regarding the market that is US and have many different opportunities and possibilities and thus facing a financial dilemma regarding the best investment channel.
Stability – The U.S. real estate market is characterized by a relatively high level of stability, at several levels, all affecting real estate investment. Economic stability and consistent growth in the standard of living in the United States generate consistent demand for both commercial real estate and residential real estate. At the same time, stability leads to growth in the value of existing assets. The transfer of capital to the US offers investors a lower level of risk (since they can expect the market to be relatively uncertain) and expectations of growth in asset values as well as income from yielding assets. Long-term planning ability is better when compared to the Israeli market, which is undergoing a process of instability due to reforms by the Ministry of Finance and changes in taxation methods for rental apartments and investment properties – the US market offers better regulatory and taxation stability.
Return on Investment. Israelis who dedicate capital for investment in real estate in the United States are given the opportunity to see higher returns compared to similar investment in Israel after taxes and expenses – real estate investment in the US may yield higher yields over time. In return on investment in real estate funds that show consistent growth while giving dividends over time, even on relatively low investment amounts.
An opportunity to start with relatively small amounts of investment compared to Israel – an investor who wants purchase real estate assets but does not have sufficient capital that allows a purchase of an asset in Israel, is able to use the same funds for investment through entrepreneurial companies, real estate funds or the possibility of purchasing properties at relatively low prices in the United States. US market allows an entry level investment starting from $50-100,000 and enjoy a long-term yield. Low initial capital and the ability to raise capital to finance acquisitions simplifies investing in the United States.
Simplicity of the business making process in the real estate US domain – Stability coupled with a standardized and accessible system that is regulated and closely monitored – both for entrepreneurs and for investors – significantly shortens the time required to start commercial real estate activity, as well as the ability for effective planning, transparency in regulations and lack of bureaucratic restrictions, ease work processes, improve yield and minimize risks during real estate projects.
Diversity – The sheer size of the US market provides a wide range of options for investment in real estate – the ability to diversify investment between different types of assets, areas with different characteristics and a wide range of companies operating in this market – all these factors encourage investors to make informed decisions and reduce investment risk. This diversity is added to the large number of market players, offering investors with a wide range of business models and methods of operation in the industry – residential investment, individual assets or housing clusters, income producing properties, various types of commercial and industrial properties, as well as investment in less standard real estate assets such as logistics Information and communications, and various growing areas. In comparison, the range of options available to an Israeli investor in the domestic market is relatively small, both due to bureaucratic barriers to entry and due to initial capital requirements. In addition, there are only a few real estate funds operating in the domestic market.
Improved investment conditions – Israeli investors currently enjoy better and easier means of making investments outside the country. Regulatory information, taxation with detailed and rich information on the state of the market and real estate assets are currently available from a variety of sources, as well as companies and commercial entities, enabling customers to work via online trading platforms – offering customers in Israel a range of professional services that can assist in managing properties in the United States. Many American companies are currently represented in Israel and allow the Israeli investor to invest in properties in the US without any special effort.