Real Estate Investments in the USA

While the real estate industry in Israel provides local investors with solid investment options and low returns, the real estate market in the United States opens its doors to foreign investors.

Thousands of investors and financiers who are not afraid of the English language or a transatlantic flight are already enjoying property ownership in the US, a steady yield yield and sharp market increases.

Why invest in real estate abroad

• The decision to invest in real estate abroad is based on various advantages given to the investor, relative to a similar investment in Israel. These advantages may vary between the various countries that are leading investment centers among Israeli investors, but are all based on similar principles:
• A variety of investment options without geographical limitation.
  The possibility of managing most stages of investment by using outsourced services and digital means, which blurs borders and creates globalization.
• Tax benefits, concessions and favorable conditions granted by governments around the world to foreign investors.
• Weakening of foreign exchange – The Israeli economy is among the strongest and most stable economies in the world, and over the past decade we can see a steady strengthening of the Israeli shekel against the US dollar and the European euro. The strengthening of the Israeli currency vis-à-vis foreign exchange creates increased profitability for real estate investments abroad, with real estate prices set according to foreign currency and translated into a lower amount of shekels, relative to such investments in the past.

Real Estate Investments in the USA – Everything You Need to Know

The warm relations between the State of Israel and the US superpower make the 50 US states leading and desirable destinations for Israelis, both for the purpose of visiting and tourism, and for the purpose of real estate investments in the US.

Real estate investments in the United States are among the most popular investment channels among foreign investors from around the world in general and from Israel in particular, and rely on a number of advantages and characteristics offered by the Land of Unlimited Possibilities:

The subprime crisis in the US and its impact on the real estate market

It is impossible to relate to the real estate industry in the United States without referring to the global subprime crisis, which struck the Western world in 2008, and which to this day constitutes an index for examining the stability and conduct of the economies of countries around the world.

The subprime crisis broke out in the US, and its source was the growth of the local real estate market, and an extravagant economic policy that included the distribution of housing loans and 100% financing granted by the banks to borrowers, under particularly high interest rates.

An economic reality that necessitated an increase in the interest rate in the economy caused a chain of events that created the crisis:

• Borrowers’ non-compliance with monthly repayments
• Realization of assets by banks and putting them up for resale
• A huge supply of properties that returned to the market in a short time and led to a sharp drop in prices in the real estate industry
• The formation of a situation in which the banks hold assets with a value lower than the amount of the loan granted for them, in difficult market conditions and low demand, which led to the collapse of the banks in the US one after another
• As a result of the collapse of the economy in the world’s leading power, the crisis spilled over to many countries in the Western world and was recognized as a global economic crisis.

The real estate industry in the US showed recovery and growth, but property prices that crashed during the crisis remained low relative to real estate worldwide. These effects are advantageous for foreign investors in real estate in US states.

Data and figures:

The United States is home to more than 340 million people and has a total area of nearly 10 million square kilometers.

The United States is the world’s superpower, and the first in its ranking in economic power.

About 35% of local residents in the U.S. do not own a real estate property and live in rentals.

The United States attracts tourists from around the world, attracts more than 60 million tourists each year, and the country’s tourism revenue alone stands at $217 billion a year (according to data from the US Department of Tourism).

The United States is also a leading academic power in the world, and is home to some of the world’s most recognized and prestigious universities, including: Yale University, Harvard University, Columbia University, Cambridge University, MIT Institute of Technology, Massachusetts Institute of Technology, University of California, Princeton University and others. Every year, about one million foreign students enroll in the United States.

Real Estate Investments in the USA – Prominent Benefits

The effective returns of real estate investments in the United States are the product of a number of characteristics that distinguish the United States:

• Scope of land – The United States includes 50 states, which combine into an economic powerhouse, covering 9,834,000 square kilometers, a huge amount of land that leads to a reduction in land costs, which constitutes a significant part of real estate costs.
  Construction methods based on rapid construction technologies, common use of cheaper raw materials such as wood, polycarbonate and centaf, aluminum. Construction using the prefabricated construction method.
• Cost of manpower – The number of migrant workers and the high number of residents in the United States also create competitiveness that affects labor costs. Manpower costs in the construction industry in the US are lower than labor costs in Israel and Europe, which affects property costs and creates significantly lower costs.
• High rental costs that are conducted without supervision in the free market, and allow investors to derive a fixed and lucrative yield during the period of holding the property.
• A decline in building starts in the US between 2022 and 2023 indicates a future shortage of assets, which is expected to lead to higher prices and high returns for investors.
• The lenient bureaucracy practiced by the US government in real estate, along with binding reporting mechanisms and full transparency, reduce the risk level of investors and attract them to choose the US as a leading investment destination.

Common Types of Real Estate Investments in the U.S

Real estate investments in the United States are provided on a number of leading investment platforms and channels:

Multi-family investments – In the United States, it is customary to rent apartments in complexes and buildings owned by a single owner or company. Multi-family investments are investments in such a structure or residential complex, as part of a group acquisition, in which each investor receives a fixed yielding return according to his relative share in the launch. The return is divided out of the total income and the investor does not take a risk on a housing unit that may remain without tenants for a certain period, or bears the direct cost of repairs and defects. This investment is suitable for investors who want a fixed return, little involvement, low equity that is insufficient to purchase an independent property and reduced risk.

Single Family Investment – Detached homes are the most popular residential configuration in the US. This investment is suitable for investors who are interested in a long-term investment and a fixed yielding return, little involvement thanks to the assistance of a property management company, and relatively high equity, or the ability to meet the terms of a mortgage loan from local financial institutions.

Investments in Town House – Projects that include Town House are projects that include a sequence of private homes in the style of a single family, but include a common wall between the houses in the project and on the same continuum. Town House buildings are decorated with a pesto look.

Real Estate Investments in the USA – How do I start?

Leaving the boundaries of the local market in order to enjoy a variety of investment channels and opportunities without geographical limitation has led many to examine international markets, with an emphasis on the real estate investment industry in the US.

It is important to note that investments in general and real estate investments in particular are not a shelf product, and it is important to choose a channel and an asset with potential, smart risk management and professional accompaniment.

Real estate investments in the US require familiarity with the local market, locating properties in high-demand areas, dealing with local bureaucracy and a variety of complexities.

It is important to enter into such investments through appropriate accompaniment, which includes advice and connection between real estate and financial experts, who connect the needs of Israeli investors to the advantages of investing in the US real estate market.

SDB is a leading real estate development company, which accompanies Israeli investors and assists in locating investment opportunities in a variety of regions in the US, and provides personal accompaniment and a package of services, tailoring the investment to the investor’s needs. The company provides investors with a legal protection mechanism, personal accompaniment and connection with local partners, for a safe investment process and maximizing the capital and investment potential.