Yielding assets: why does the yield sometimes lie?

[:he] You all must have come across the phrase yielding property, which is considered a well-known and well-known term in the real estate market. Yielding properties are currently popular and even trendy investment alternatives, especially in light of the low interest rates in the Israeli economy on savings. In fact, any property can become a yielding investment property under one condition – which upon purchase can receive rent for it. Therefore, any property including apartments, industrial plants, commercial centers, logistics warehouses, stores, offices and even entire buildings can be income-generating properties. However, a common mistake is to check the feasibility of the investment according to the yield at the time of purchase A yielding property for investment, i.e. how much rent you get from the property every month. In fact, the yield received from yielding properties only gives a partial picture of the feasibility of investing in the property. Furthermore – evaluating the property solely according to the yield causes its value to increase far beyond its real value, meaning that we will pay a lot for it More than necessary and accordingly we will receive a lower return. We asked Yair Levy, the real estate expert, what should be examined before purchasing a yielding property and here is his answer: What should be examined before purchasing yielding properties for investment?

1. The real yield of the property, i.e. what is its value today and what is expected to be its value in the future. In this calculation the rents must be included and checked against the rent prices in similar properties. For example: when the rent is relatively high compared to what is accepted in the market, it is possible and forced to compromise in terms of the price when renewing the contract. In this section, it must be checked whether there is a possibility of dividing the property (parcellation), whether its current use is considered an abnormal use and will result in future improvement levies. It is also necessary to check what the future construction plans are in the area and what their estimated impact on the yield will be.
2. The real value of the property, that is, how much a property that meets the same criteria will cost if we have to rebuild.

In fact, in the area of income-generating assets, as in other areas of life, a wise decision must be made, that is, a decision based on knowledge and information, on seeing the broad picture and learning the subject in depth. Therefore, we recommend consulting real estate experts if you are interested in profitable properties for sale.[:]