Dealing with Israeli Contractors

If you call up an Israeli contractor for a price, hearing your accented Hebrew will probably add 20% to his regular fee!  As an experienced Israeli property manager and qualified lawyer, Shaun Isaacson has a clear advantage in hiring and supervising Israeli contractors.

When organizing and overseeing renovations and repairs in the properties that he manages, Shaun knows that he gets a better deal than his clients would have gotten for themselves. “I have seen how the price of a project can vary depending on the nationality of the client and the neighbourhood in which they live. Contractors will often take advantage of your accent and your address, thinking that you are a wealthy foreigner who can afford to pay more. Also, because I manage multiple properties, I can negotiate better prices than a homeowner, because companies want repeat business. This also motivates them to work faster and do a better job, because they know I will not hire them again if I am dissatisfied.”

In addition to Hebrew fluency and native negotiation skills, Shaun has the advantage of extensive experience in working with Israeli buildings, which are often built differently from his overseas clients’ home properties.

“Most Israeli buildings are made from poured concrete and they are often susceptible to cracks and water damage. The problem with leaks in concrete is that the water can enter at one location and seep through a crack somewhere else. Finding the source of the problem can be a game of trial and error, causing extensive damage to walls or ceilings in the search for the source of the leak. We have often brought in a company that uses an x-ray machine to find the crack in the pipe or the concrete and diagnose the problem. This service is costly but it cuts out the expensive guessing games and helps to minimize the repair costs.”

In one property managed by Creative Estates, it became clear that they had an electrical problem throughout the house. An old water leak had caused corrosion in the wires, and the fuses kept short-circuiting, which suggested that the wattage was too low for their electricity usage. Shaun’s team of electricians surveyed the property and recommended changing the spot lights (over 50 of them) in the ceilings throughout the house to LED lights, in order to reduce electricity consumption. They identified several problems and fixed them, without the unnecessary expense and disruption of rewiring the entire house.

In another example of how creative thinking can save Shaun’s clients money, the owners of a different home called in a swimming pool company who advised them to dig up the garden and install a cement pool, which would require building permits. Instead, Shaun and his team recommended installing a deck with an integral plastic pool which did not require permits. “The pool company had a standard way of working but, by looking at the problem from a different angle and thinking outside of the box, we saved our client 40% of the installation cost.”

Shaun understands that his job as a property manager includes managing construction and renovation projects, so he does not charge an additional management fee for this work. He supervises the contractors himself, which saves his client the cost of bringing in a site manager. “I have built up a team of highly skilled plumbers and electricians, builders and painters, who work on the properties that I manage. Not only can I rely on their honesty and professionalism, but if anything goes wrong, they know what to fix and they don’t quibble about putting it right. Our clients know that we will manage the entire project from start to finish, saving them money and stress.”

For more information about Creative Estates property management service in Israel, contact Shaun Isaacson at shaun@ceisrael.com or on +972 52-652-1096. We will give you a price quote in complete confidence and without obligation.

The Truth About Israeli Real Estate Prices

Stories in the media about falling Israeli property prices look like good news for buyers and bad news for investors, but do these statistics tell the true story?

To paraphrase Mark Twain, reports of the demise of the Israel property market have been greatly exaggerated!

While the Ministry of Finance reports that real estate deals dropped 15% in the last quarter of 2016, demonstrating a cooling down of the Israeli property market, and the Central Bureau of Statistics’ report showed a 1.2% decline in the housing prices index at the end of 2016, but another report by the Appraisers Association shows that average apartment prices rose 1.7% during the fourth quarter.

So who and what should investors believe?

Israel’s Finance Minister Moshe Kahlon is under pressure to show that his policies have helped to reduce housing prices, but a closer look at the figures shows that the facts do not support this claim. The cabinet decided several months ago that they would only publish house price data from the Central Bureau of Statistics (CBS) and not from Israel’s Real Estate Appraisers Association.

The chairman of the Appraisers Association, Ohad Danos, is quoted as saying that the CBS index showing a fall in house prices in December 2016 is misleading. The Association’s own survey shows continued price rises among new and second-hand four-room apartments in 16 cities. They say that prices rose during the fourth quarter of 2016, averaging 1.7% higher than the previous quarter. They also compared this period with the corresponding period in 2015 and found an average 8.3% increase in housing prices since last year, with the highest rise being 13% in Tel Aviv and the lowest 2% in Haifa.

It is important to note that the Appraisers Association survey looks at the average price of four-room apartments in specific cities, but prices can vary between different neighbourhoods. They reported on the standard deviation for each city, showing that prices varied by 30% between different areas of Tel Aviv, and by 20% in Netanya and Jerusalem.

Analysts say that while the CBS survey is more comprehensive than the 16-city survey by the Appraisers Association, it is skewed by the inclusion of buyer fixed price deals. This is a system of housing project tenders that was introduced by the government to encourage contractors to build cheaper housing. They compete to submit bids for new housing projects that are lower than the maximum price set by the government. In one new Ramat Beit Shemesh project, for example, the tender achieved a 17% discount on local market prices.

Comparing the CBS and Appraisers Association figures for a specific city, Danos points out that fixed price tender sales accounted for 25% of all deals in the city of Rishon Lezion during the last quarter of 2016. Such deals are clearly skewing the picture, and Danos claims that without these housing project tenders, the Rishon Lezion real estate market would have shown a 1% rise in prices instead of a 6% decline. It is clear that including these government tender projects in CBS house price statistics gives a misleading picture of an overall fall in market prices, which is what the government wants its voters to see.

The CBS survey also points to a sharp fall in the purchase of new homes by first time buyers, but admits that many young couples are holding out for buyers fixed price tender projects. Building low-price housing is clearly good news for young Israeli couples, but it should not disturb overseas investors unduly. The overall housing market in Israel remains strong, with core demographics for marriage rates and expected Aliyah from Western countries continuing to drive demand for residential property.

According to government statistics, home purchases for investment fell 27% in the fourth quarter of 2016 and made up only 17% of all residential apartments sold. These figures compare purchase data with the previous summer quarter, which was a stronger season for the real estate market, and not the last quarter of 2015, which was similarly weak.

Those realtors who are talking about Israeli property prices starting to drop may be trying to drum up business in a slow winter market. They point to an increase in mortgage interest rates, an increase in purchase tax to 8% in July 2015, and a new tax on owning a third housing unit, due to come into effect on April 1, but most believe that that the overall trend is not changing. Some realtors talk anecdotally about sellers having to reduce prices to sell their properties, but admit that sellers may have unrealistic expectations and their asking prices may have been over-inflated.

The Appraisers Association survey of 16 Israeli cities shows that in the last quarter of 2016, average apartment prices increased by 4% in Holon and Ashkelon, 3% in Netanya and Kfar Saba, and 2% in Ashdod, Modi’in, Ramle, and Tel Aviv. Average increases in prices were recorded as 1% in Beer Sheva, Jerusalem, Petah Tikva, Rishon Lezion, and Rehovot, and there was no change in average housing prices in Haifa, Herzliya, and Eilat compared with the preceding quarter.

To quote Mark Twain again: “There are lies, damned lies, and statistics

Opportunities in Central Israel

While Israeli politicians talk about developing the country’s northern and southern peripheral cities, there is still plenty going on in the centre of the country. New residential developments in Netanya, Herzliya and Ra’anana offer great opportunities for investors.

Netanya is one of the fastest-growing cities in the Mercaz (central) area, with plans to expand to 350,000 residents by 2020. There is new construction in the east of the city in Kiryat Hasharon, and also in Ir Yamim, the new coastal suburb located to the south of the city center, near Ramat Poleg.

Ir Yamim has been planned to include 4,000 residential units with excellent facilities and beautiful surroundings. It is bordered by the Mediterranean Sea, the Poleg Nature Reserve to the south, and the Irusim Nature Reserve inland. It is also conveniently located near the Poleg junction, with excellent transportation links to Tel Aviv and other cities.

There are plans to build hotels in Ir Yamim to take advantage of its beach access. Unlike the northern and central Netanya beaches, there are no cliffs to navigate when approaching the beach from the town. The municipality is constructing cycle paths and promenade routes along the beach, making it a truly accessible coastal resort. Apartments in Ir Yamim are sure to attract high rents, whether as holiday lets or year-round accommodation for those who enjoy the sea.

Herzliya has always been one of the most desirable addresses in Israel, and recent developments are likely to increase demand. Premier real estate along the shoreline has been planned and designed to combine prestige housing with a beach front hotel, restaurants, cafes and water sports facilities. In Pituach by the Sea, the traffic is routed underground and there are landscaped paths for pedestrians only, linking public parks and community facilities. It is hard to believe that this green paradise is located just a few minutes’ drive from Tel Aviv! The entry prices for these residential projects are steep because Pituach by the Sea will soon become one of the most sought-after locations for wealthy Israelis and expats alike.

Neve Zemer is the new suburb of Ra’anana currently under construction. The city has always been popular with Anglo-Israeli families and those who appreciate its clean streets and well-run urban facilities. Today middle-class Israeli and French families are choosing Ra’anana because of the high standards of its schools and its tolerant traditional Jewish atmosphere – restaurants and shops on its main streets are all closed on Shabbat. This new northern neighborhood will enable thousands more families to enjoy an excellent quality of life. Neve Zemer is being planned with landscaped open spaces, recreational facilities and urban entertainment centers for residents of all ages.

These three examples of high-quality residential developments demonstrate confidence that demand remains strong at the top end of the Israel real estate price range. Many mid-range developments are underway in other central areas of Israel. If you are interested in investing in residential properties in Central Israel, with expert management services and excellent rates of return, speak to Shaun Isaacson at Creative Estates Israel today.

Getting the Maximum for Our Clients

If your house was unoccupied and a pipe burst, how much damage would be caused? It hardly bears thinking about! A good property management company will make sure that you suffer minimum damage and receive the maximum insurance payout. Shaun Isaacson, CEO of Creative Estates Property Management, explains how.

Among its portfolio, Creative Estates Israel manages a number of high-end properties in Herzliya Pituach that are empty for most of the year. Shaun Isaacson and his team make sure that they are cleaned and maintained in their owners’ absence. In accordance with the requirements of the insurance company, the water supply, gas and electricity in most of these homes is turned off while they stand empty.

The regular cleaner for each property is instructed to turn on the water so that they can clean, but on one visit the cleaner realized that there was water pouring down from an upstairs bathroom. She quickly turned off the water supply after calling Creative Estates. Shaun sent a contractor to assess the damage, and called the insurance company to invite them to send an assessor to do the same.

In a very short amount of time, a large quantity of water pouring from a pin-sized hole in a bathroom pipe on the second floor had flooded the bathroom and the kitchen beneath it. The water damaged carpets, walls and flooring, as well as multiple kitchen and bathroom cabinets.

The Creative Estates property management team estimated that the cost of fixing the damage would be 50,000 NIS, but the insurance company offered only 30,000 NIS. Shaun was able to show them estimates for the price of the work, emphasizing the quality of the furnishings that needed replacement, and insisting that the wet sand under the bathroom floor and the damaged plaster in the walls should all be carefully removed and replaced.

After some extended haggling, the insurers agreed to pay the full amount requested, and Shaun ensured that all the work was carried out to the high standards that the owners are entitled to expect.

Shaun explains: “I have no doubt that my professional experience, my persistence and my company’s bargaining power enabled us to get the full payout for my client. The insurance company hopes that we will continue to insure our portfolio of properties through them, which gives us more leverage than any private home owner in Israel would have had in a similar negotiation.”

During the entire saga, Shaun sent full updates to the owners of the property, who were relieved to know that Creative Estates was taking care of everything and there was no need for them to fly to Israel to check on the repairs. The house was fully renovated and as good as new in time for their next visit.

 

Preparing Your Home For Rental

If you are thinking about renting out your home to friends or to strangers, whether as a short term vacation rental or for a longer period of time, what steps should you take to prepare your home for rental? Shaun Isaacson, CEO of Creative Estates Israel, is an experienced property manager and offers the following tips.

  1. Clear up the clutter – store valuables and personal items off-site if possible, or in securely locked cupboards.
  1. Set your red lines – the minimum rent and rental period that you will accept, the maximum number of occupiers, rules concerning pets and smoking, and the security deposit that you will require to cover any possible damage.
  1. Fix all leaks and potential plumbing and electricity problems – get everything fixed and designate trusted maintenance people that your tenants should call in an emergency. Under Israeli law, the property owner is responsible for all plumbing and electricity issues.
  1. Organize insurance for your property and any contents that you own – tenants must have their own contents insurance. We recommend paying a higher premium to allow you to call your own maintenance people immediately, rather than waiting for the insurers’ team to turn up.
  1. Check that you have all the instruction manuals for your appliances and preferably arrange maintenance policies to get them fixed quickly and cheaply if they break down.
  1. Draw up a solid and legally enforceable lease agreement to protect yourself and your property, including who is responsible for paying bills, and penalties for late payment of rent.
  1. Set up automatic payment for fixed bills such as Arnona (municipal taxes), water, electricity, gas and Va’ad Bayit (building maintenance).
  1. Have meter readings taken at the beginning and end of each tenancy to calculate electricity, gas and water bills (particularly important for short-term rentals).
  1. Redirect your home phone line and consider disconnecting the phone – today very few tenants require land lines, but they may require internet and cable/satellite tv connections.
  1. Organize deep cleaning and painting for your home, and arrange for regular garden and pool maintenance and cleaning of outdoor areas by trusted companies.
  1. A home inspection and audit will help to highlight possible maintenance problems and also provide evidence of the state of every part of your property at the start of the rental period, in case of damage caused by tenants.
  1. Draw up checklists of furniture and kitchen utensils, for counting and checking at the end of each tenancy.
  1. When advertising for and interviewing tenants, insist on references, credit checks and guarantors, as well as the security deposit and payment of rent in advance.

With so many things to take care of, both before and during each rental period, you may want to consider hiring an expert to prepare and manage your property in your absences. Creative Estates Israel is experienced in fixing potential problems before they arise, and we are qualified to manage all the legal and financial aspects of rental arrangements. Talk to us today for a free no-obligation price estimate – curing your property rental headaches may cost less than you think!

10 Tips for Preparing Your Israeli Property for the Winter

If you own an Israeli property that may be empty for all or part of the winter season, here are our top ten tips for preventing any floods, leaks or pipe bursts this winter.

Israeli homes are really designed for the summer, which is generally three times longer than the winter season. Most houses and apartments are built with stone floors, poor insulation and minimal drainage systems, unsuited to coping with sudden rainstorms and even snow in some parts of the country.

At Creative Estates Israel, we have many years of experience in managing holiday homes and rental properties and pre-empting winter crises. From experience we know that all Israeli properties, whether tenanted or empty, should always be thoroughly checked at the start of the winter to ensure that they are weather-proof.

Our Israeli Property Winter Checklist:

1) Clean Gutters and Drains

Before the first rainfall of the season, make sure that water cannot collect in places where it may cause flooding inside your property, such as window ledges, door sills and air conditioner pipes. Ask your upstairs neighbours to do the same, so that you do not find water leaking through your ceiling from their balcony. Your building manager (Va’ad Bayit) should also clear leaves and garbage from the drains and walkways around the entrances to the building, to prevent flooding and slipping accidents.

2) Check for Leaks and Cracks

Water can seep through the smallest cracks and will always find the weakest points through which to escape, often causing leaks or dampness in the walls. You may be able to see the marks of damp or mold on the walls or ceilings showing where last winter’s leaks occurred. Persistent dampness during the winter months can cause allergies and breathing difficulties, as well as damaging furniture, furnishings and the building structure. Landlords are expected to protect their properties against leaks and dampness, and they may be held liable for damages caused to their neighbors if they fail to do so.

3) Water Heating Systems

Most residents and tenants only turn on their supplementary electric water heater when the weather turns cloudy and cold. If it has been unused during the summer, it is sensible to check your water heating system before you turn it on for the first time. Boiler systems may be used to power radiators as well as providing a supply of hot water, so you should have both functions checked. Lives can be saved by removing bird’s nests and other blockages from flues, because if the ventilation system is blocked when the boiler is turned on you might cause carbon monoxide poisoning. When calling a maintenance engineer, remember that Israeli boiler systems are known collectively as ‘Yunkers’, named after the original Israeli manufacturer.

4) Central Heating Systems

In apartment buildings, the central heating may be centrally controlled by the management committee, with fixed dates for turning them on and off. Individual apartments may have supplementary air conditioning units or other electric room heaters.

5) Position Room Heaters

Put safety first when positioning and using electric room heaters. Keep them out of reach of children and make sure that soft furnishings – curtains, cushions, mattresses and clothes – cannot fall onto them and cause a fire.

6) Adjust Air Conditioning Units

Many people choose to use wall-mounted air-conditioning units for heating during the summer. If so, it is crucial to adjust the vents so that they point downwards to send warm air circulating around the room. Otherwise the upwards setting that you use for cold air in the summer will just heat your ceiling! Remember to clean the filters too.

7) Add Window Insulation

Israeli homes have very little insulation, so precious heat can be lost through windows and walls. It may help to check that your trissim (window blinds) close tightly and do not rattle in the wind. Hanging curtains and putting draught-excluders along cracks in walls and under doors can keep help to keep the cold outside and the heat inside.

8) Prepare for Power Cuts

It’s not unusual for the power to go out at any time, so it’s good to prepare emergency back-up systems such as alternative power supplies for important appliances like freezers and computers, emergency lights for stair wells, and supplies of candles and matches. In some areas it is advisable to keep a kerosene heater or other non-electric heating source to keep you warm during extended power outages.

9) Protect Water Pipes

If your home is in an area where the pipes may freeze, we recommend leaving a tap dripping slowly during very cold periods, to prevent pipe bursts. It’s a good idea to disconnect outdoor watering systems during the winter, to save water and to protect the pipes and connectors from damage.

10) Check on Empty Properties

If there are empty properties in your building that are not taken care of, all the above problems can spread from their apartment to yours. Leaking pipes that go undetected can cause long-term water damage in other parts of the building. If you know that your neighbours are going away for the winter, recommend that they get a good Israeli property company to check on their home.

Creative Estates manages properties all over central Israel and we send our maintenance teams to every property to check that everything is ready for winter and stays water-tight. To speak to Creative Estates about checking and managing your property in Israel, contact Shaun@CEIsrael.com