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The new tax charges in Israel scare away real estate investors, while commercial real estate investments on the other hand give higher returns than investments in Israel. In addition, investment in USA’s commercial assets are relatively attractive, and in this article, we will try to shed light on the reasons for it.
Yield
Real estate investments in the United States under various amounts yield more than 7% per annum, with cumulative growth under various rates. Purchase tax in the United States is less than 1%, in comparison to 8% for real estate investors in Israel. Today, Israeli investors look for alternatives to capital gains (selling price after subtracting purchase costs) and neglect current yields (significantly lower in Israel than in the United States) and the more demand is, the lower are the expected profits, which provide relatively higher returns than investments in residential real estate in Israel.
The type of companies to invest in
Companies that are highly rated should be sought from BBB to AAA, which intend to invest in assets that will yield higher returns and are secured due to their financial stability. For example, if “Dollar General” plans to set up a branch in a promising area, it will finance the project threw investors and will provide them with guaranteed returns as part of its rental costs and/or interests costs. The reason is that large companies open many branches and prefer to use their capital to market their core business and reduce the worth of assets in their balance sheet because of the ratio between capital to assets when issuing shares to the public.
Day to day Operation
There is a guarantee that the yields consider to be triple net. In other words, the companies liable to insurance, maintenance and improvements that refer to their business needs and pay the real estate investors a net yield without further involvement and costs.
Initial and closing costs
Additional costs: Purchase tax, brokerage fees, lawyer fees, one-time travel to meet the corporation’s representatives and establishing a bank account in the US. These closing costs may be up to 2% for investments made from shareholders' equity and without loans. Costs of submitting annual reports may cost up to a few hundred dollars per annum and are negligible.
In conclusion
In Israeli terms, instead of buying a property that costs NIS 4 million including a high purchase tax and an income of NIS 120,000 (2.5%), it is possible to receive almost NIS 280,000 per year (2.33 times more) and live in welfare. The investment can be sold on the free market in the United States and in Israel. In addition, capital gains tax when selling properties in the United States are significantly lower in the US.
In conclusion, there is a proven feasibility of investing in commercial real estate of commercial corporations that are financially stable in the United States, which promise higher yields than in Israel, and select reliable mediators that provide professional and transparent consultation regarding the acquisition of the aforesaid assets.
