If your goal is for your money to work for you and generate additional return and income. Our recommendation is to avoid direct ownership.

Maintaining a property in the US incurs many expenses some of which are listed below.

 

In the method we are working, you manage to enjoy both worlds. You buy a property, but do not have to deal with it,  Take care of tenants, pay property taxes, make repairs to the property and take care of problematic tenants.

 

For an explanation of the investment method, click here

 

The fixed payments that apply to a property owner:  

 

1.  Home Owners Association Associations Fees or in short: "HOA"  -

 

Monthly cost does not exist at all or is negligible when it comes to a single family, but can reach very high amounts when it comes to condo apartments in large complexes where the cost of managing the entire complex is quite high. Of course the higher the level of building and services the higher the HOA cost accordingly!  

 

2.  Property Tax - (Property Tax)

 

It is usually paid once or twice a year at the end of each year for the past year. The price is a result of the value of the property as assessed by the appraiser of the county where the property is located (The County Assesor). Up to $ 2,500 a year and in some areas even more!  

 

3.  Insurance  -

 

Property insurance is one of the fixed and important expenses in managing a real estate property. We are all witnessing natural disasters that afflict certain areas in the US and are capable of destroying entire cities as a trifle! The cost of insurance depends on the location of the property (in California for example the cost is about half the cost in Florida or Oklahoma because of the exposure to the hurricane and tornado respectively).  

 

4.  Management Fee  -

 

The payment to the company that manages the property on a regular basis is about 10 percent of the monthly rent (except for months when the property is empty without a tenant). Beyond that, the management company charges a fee of one month once a year when renewing the contract.

 

5.  Corrections  -

Repairs and ongoing maintenance are a very significant part of the operation and rental of a rental property in the United States. We as Israelis do not usually know the high standards required of them in the United States! If the property is rented to a tenant with a government guarantee (section 8) the standards we require are even stricter and in addition once a year the property undergoes rigorous standard inspections by a district inspector and once every three years it undergoes a rigorous audit by the municipality.

 

Expenditure for repairs and routine maintenance is in our opinion the largest exposure of the residential real estate investor in general and of a passive investor in remote control in particular since one seemingly simple repair (replacing a central air conditioner, roof leak, sewer pipe replacement) can cost thousands of dollars, erase the yield and even cause For temporary loss.

 

For an explanation of the investment method, click here

 

6.  Legal expenses -

 

These are usually legal expenses of evicting a refusing tenant. This cost can range from a few hundred dollars to thousands of dollars ($ 7000 for a California jury trial)! It all depends on the specific case, the country where the property is located and how much the tenant is willing to invest in the war with the property owner and / or the management company. It is important to note here that a good and experienced management company prepares leases in advance which facilitate the eviction and significantly reduce the exposure to high legal expenses. The model we propose completely eliminates this risk.  

 

7.  Loss of income  -  

Many investors, especially early-stage investors, completely ignore the loss of income and calculate the return on a property that is always rented to a tenant who pays rent forever in full and on time. Unfortunately, the situation is different in all real estate investments anywhere in the world! Governments also violate rental agreements sometimes (rarely though, but when it happens to you the investor it hurts), not least middle-class tenants and people with below-average incomes. Dismissals, illness, divorce, Death in the family, detention of the breadwinner by the law enforcement authorities are some of the reasons why tenants stop paying rent.At best they break the contract (by non-payment of rent) but vacate the property, at worst they break the agreement but refuse to vacate.

Either way the asset stops yielding a return, for a time that cannot be predetermined or controlled. It can range from a few weeks to a few months and more all depending on the circumstances of the case. Loss of income also exists in cases where a tenant legally leaves at the end of the contract he has signed. The management company will prepare the property for a new tenant and in the meantime the property will stand empty will not yield a return and will cause the investor to spend money for the regular expenses that continue as usual (insurance, property taxes, repairs, house) and new additional expenses that apply to the tenant who left or left: Electricity, water and gas. Our unique model completely eliminates these problems.