When the capital market shows sharp declines, the banks stutter, and the foreign exchange is unstable, the real estate industry proves once again the stability, strength and potential for investors.
Despite the prominent advantages offered by the real estate market according to other investment channels, investment real estate properties are not a shelf product, and the various real estate investments are not identical in scope of risk, projected return and suitability to the many investors in the market. The decision facing investors is not which industry to invest in, but which real estate channel will provide the best value for investment.
Among the many investment real estate channels available in the industry:
- Purchase of residential property for rental purposes to create income-producing property and passive income, as well as for the purpose of selling the property that yields a return.
- Purchasing a residential property and improving it for a combined yield, renting for a limited period of time, and selling it at a higher price.
- Purchase of commercial property for the purpose of renting the property to businesses under long-term contracts and high yielding yields.
- Purchase of agricultural land at a reduced price, for the purpose of thawing the land and changing its designation to land for construction – an investment that is expected to yield a high return but is also correspondingly high in risk.
- Real Estate Funds – Investment real estate funds are funds that raise capital from the public, invest it in real estate projects in Israel and around the world, and derive returns for investors.
How to choose a real estate channel for investment
The decision to invest in real estate requires thorough and meticulous preparatory work, familiarity with the various investment channels and the characteristics and risks they offer, financing costs and tax obligations that may affect the profitability of the transaction, and the ability to analyze these data.
One of the safer and most convenient ways to gain access to all the relevant information and maximize your investment chances is by choosing to invest through a real estate investment company.
A real estate investment company is a company that brings together a wide range of professionals, including: real estate experts, legal advisors, analysts specializing in data and data analysis, and others, in order to locate real estate opportunities for investment.
Among the characteristics of independent investment in real estate properties:
A requirement for high equity, usually combined with financing.
Real estate taxation costs customary in Israel and stringent with investors who purchase a second property in addition to an existing residential apartment, or local taxation depending on the destination country in the case of real estate investments abroad.
Risks – The purchase of an apartment or commercial investment property provides the investor with a material asset in his possession, which provides the collateral for investment. At the same time, insofar as it is not an apartment intended for personal use, these investments are not without risks. The main risk inherent in investing in real estate is the plummeting value of the property in the planned time frame for investment, which will lead to a loss of capital. Even stagnation in the market makes the investment unworthwhile, when the costs associated with buying and selling the property, along with the frozen capital, will turn an investment into a disappointing loss. Other risks relate to properties intended for rent, which often require maintenance and repair costs, and/or remain empty and without tenants for periods of time, leaving the investor without the expected income.
In land acquisition transactions for compromise purposes, the greater profit potential also involves a greater risk, for investment in land that will not eventually be thawed, leaving the investor with land with no construction options and a reduced value.
Investment through a real estate investment fund
Investment real estate funds are based on the principle of group acquisition, while creating a professional envelope that includes the best experts, the required connections and risk diversification, in order to bring about the growth of the fund and the capital of its investors.
The choice of investment through an investment real estate fund is characterized by a number of advantages that attract investors:
The fund is managed by a team of experts in various fields, who analyze the investment potential and determine the investment strategy, using tools and professional management based on training, knowledge and many years of experience.
The capital required to invest in the fund is low relative to the capital required to purchase an apartment, house, office or any real estate asset independently, and without the need to commit to expensive financing.
Unlike an investment in a single asset, which is carried out against an estimated forecast, it is possible to examine and measure the fund’s performance throughout its years of activity, and its successes.
Thanks to the connection between a team of experts and the knowledge bases used by the fund to manage the various investments, the Real Estate Investment Fund is not limited to investments in the local geographic area, and opens channels for real estate investments abroad while analyzing the international market and the possibility of locating assets, projects and investment opportunities worldwide.
SDB – a real estate investment company
SDB is an Israeli company that operates as a privately owned real estate investment fund, which connects Israeli investors to investment ventures with attractive yield potential abroad. The company concentrates its efforts on a variety of investment centers and ventures in the US, Spain and England.
The fund invests in projects and projects with a large number of residential units or business assets, while raising and investing the capital required to complete the project, and raking in the profits and distributing them among the investors within a period of time ranging from 3 years on average.
The fund’s investments are strategically based, including an efficient mechanism for reviewing and locating properties in prime locations, while connecting with local partners who will assist in completing the tools required for real estate activity in the aforementioned target country.
The assets in which SDB Real Estate Fund chooses to invest are properties with high improvement potential and the need for rapid capital raising, two characteristics that enhance the potential return for investors, while the fund’s experts are also responsible for a comprehensive examination of the risk factors, mapping them and choosing assets with collateral and low risk potential.
The Fund provides liquid capital, which comes from investors’ funds and from loans taken by the Fund to supplement the capital as needed, from local banks, which indicate confidence in the Fund’s projects and activities.
Throughout the investment period, the fund’s experts perform meticulous monitoring, analysis of information and assessments, and all investment channels are managed in real time, striving to maximize the potential return and protect the interests of the investors in the fund.
Investors receive a comprehensive legal mechanism that accompanies each and every transaction with full transparency and the possibility of monitoring the fund’s performance while detailing the various investments, full discretion, risk diversification and supervised and controlled real estate investments, in which the fund’s management fees are derived from a mechanism that relates to its performance, and constitutes an invigorating model for responsible management and striving for the capital growth of its investors.
