Real Estate in Eilat

An unexpected post which even has no category to be put under on this site. Nevertheless it is just the right format – my personal experience which I would like to share with others. It seems to me that information in this post can come in handy for many people and I am open to all your questions.
The issue of buying a flat in Eilat for renting out was being considered by me for several months. These preparation and analysis were thorough and slow. In the end of 2013 I decided to invest 60000 Euros into real estate and started to look through the possible variants. As I didn’t need to get the rent right away I was eagerly considering variants involving some loans.
I didn’t even take into consideration resort real estate due to the high risks it involves.

Here are the options I considered:

1) Moscow/Moscow Region

Pros

– native language;

– there are friends, acquaintances, friends of friends etc. ready to advise and help;

– low or no taxes;

– high demand;
Cons

– there is no property protection institution as such. No one can guarantee that your real estate will always remain your property whatever happens in the country;

– unstable economical situation with negative trends which finally resulted in the crisis of 2014;

– it’s impossible to take mortgage (15% interest rate is just inhuman!)

2) Spain

Pros

– cheap with distant prospects of constant growth;

– well-developed and foreigner-friendly real estate market which is easy to understand and pleasant to work in;

– Spain is just a great place:);

– if you make an effort, you can take mortgage with 4-5% interest rate;

Cons

– huge taxation for non-residents (10-15% tax on purchase and 25% on any profit);

– low level of life of local population and never-ending court proceedings. As a result of these there is a big chance of wasting your time with residents unwilling to pay for the accommodation. It’s worth mentioning that this point doesn’t have any real evidence.

Dublin, Ireland

Pros

– very cheap, especially when compared to an average salary;

– everything is in English;

Cons

– a big profit tax for non-residents;

– an unusual focus area, so not much information about it.

Eilat, Israel

Pros

– good economical perspectives of the country in general and high level of private property protection which spell reliability and security;

– no taxes for citizens (I have no idea about non-citizens);

– a citizen can take a mortgage with 3,7% interest rate (I have no idea about non-citizens);

– a nice place to stay;

Cons

– relatively expensive;

– the city is a resort and logically there is a possibility of unpredictable demand fluctuations.

Having made such a list and having thoroughly analyzed it I made up my mind about Eilat. With the money I had and about the same amount of money from a bank I could afford to buy the cheapest three-room shell and core flat in an old dilapidated house in a good neighborhood or a two-room flat in a little bit better condition. A three-room flat means there is a big space acting as a kitchen and living room at once and two small bedrooms. This kind of flat in an old house but renovated can be rented out for about $700 a month, communal services not included. A similar two-room flat can be rented out for $600. Prices for flats in new modern houses and estate developments start at $200 000, but those flats can be rented out for approximately the same sum of money, so I didn’t even take them into consideration.
Prices and demand are almost the same in Haifa. Other cities have either much lower demand and much more pessimistic growth perspectives with the same real estate prices or a lot bigger prices. To give you an example, a similar three-room flat in Tel-Aviv starts from $250 000.

I should draw your attention to the fact that here I am speaking of houses and flats owned by their residents themselves. And these are only the residents who decide what should be done with their house: should it be painted, redecorated and so on. In Eilat there is a big number of flats for sale in the houses cared for by a special asset management company. These houses will look just a perfect place to be with security guards by the entrance, a swimming pool and other niceties. Although everything must be paid for. There you will have to pay a considerable sum to the asset management company on a monthly basis, and the sky is the only limit. This sum can come up to $150 a month or more. That is why those flats are inexpensive and they are hardly ever sold.

To cut the long story short, after several months of slow choosing I finally made up my mind on a tree-room flat in poor condition. It was located in an old house on the top, third floor but in a nice residential area.

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Before the renovation

The flat is divided into two separate flats with bathrooms, kitchens and entrances. This is the peculiarity of Israeli real estate market: one-room flats are very rare, but there is a great demand for them. That is why quick-witted big flat owners divide their big flats into several smaller ones and rent them out for more money altogether than they would have for letting a big one.

I bought the flat in October and spent the next three months closing the deal and renovating the flat.

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The smallest Hyundai was able to accommodate things which didn’t go into my previous car Renault Megane. It’s impossible to cope with furniture alone, so Katya is my best helper ever! This photo was taken by a Russian couple who could fit nothing into their sport-car:)

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After an inexpensive renovation

This experience proved to be a valuable one: buying real estate in a new country in your non-native language, working with builders without having any prior experience in renovation and rebuilding flats… All these made me violate my freediving trainings plan!

According to my plan this flat should have been let for $600 a month and the second one for $450 all inclusive except for electricity. But the estate agent who had been supposed to organize this turned out to be an unprofessional chatterbox!

The renovation of the second smaller flat lies ahead of me because I he didn’t manage to rent it out as it was. So the next visit to Eilat is coming soon.

This post is just a general description of Israeli estate market peculiarities. If you want to know any details or ask questions – welcome to the comments! I’ll readily answer!

Один комментарий на “Real Estate in Eilat

  1. Andre
    Sunday June 21st, 2015 at 02:15 PM

    Здравствуйте.Я живу в России,но у меня есть гражданство Израиля.Уже два года думаю о покупке квартиры в Эйлате.Ваша статья мне очень понравилась,но возникло очень много вопросов.1)как Вы выбирали квартиру?2)Как оформляли машканту,и в каком банке?Если не трудно ответьте пока на эти вопросы,а потом если можно я задам следующие.

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