Along with the popular perception that housing prices are on a constant upward trend, in the commercial real estate market we have been witnessing price volatility for years. What are the questions that must be answered before deciding?
Yair Levy talks about the differences between investing in an apartment versus investing in a business yielding property
Let’s start with the bottom line. Investing in a yielding property is not like investing in a residential apartment. While the common perception is that housing prices are on a constant upward trend, in the commercial real estate market we have been witnessing price volatility for years. And that’s even before we talked about the cost of financing, taxes, and other things. In most cases, investing in a business-yielding property is done with bank financing, so the real return should be examined. The interest rate is now low, and the loans are cheap, but there is no doubt that there will be a change and the real return will change. The second issue is taxes – business properties for investment, unlike residential apartments, are also required to report to VAT. And this is another dealing with the tax authorities, with all that implies. And perhaps the most important thing to know is that when purchasing an investment property in an area that we do not know well, we will be more affected by changes in the business environment that may affect the ability of our tenants to pay rent. …. When we know it will probably be too late… It is important to remember – investing in a yielding property is a much more complex matter than investing in an apartment, and is not suitable for everyone, so seek the help of experts.
