Even in the construction-clearance phase, I hear too many sentences like: "They promised us another 25 square meters," "The developer signed off on parking and a warehouse," "The plan has already been approved." But anyone who really knows the market knows that the area is much more complex. • Yaakov Reinitz, real estate consultant, with a special support for urban renewal
If there is one phenomenon I have identified in recent weeks, it is an influx of the ultra-Orthodox public into investments in evacuation-construction complexes across the country.
And that's no coincidence.
After the Haredi public was excluded from the 'discounted apartment' lotteries, thousands of young couples and investors are looking for the following alternative: If it is impossible to buy a discounted apartment from the state, we will buy an old apartment in an urban renewal complex, wait a few years and receive a key to a new, upgraded apartment.
On paper, it sounds logical. In reality, there are quite a few excellent deals. But this is where the red light comes on.
In recent weeks, my email inbox has simply been overflowing. Hundreds of inquiries from investors who want to talk about only one thing: eviction and construction. Everyone is sure that the old building will become a luxury tower and they will rake in huge profits. They are sure that they have found the deal of their lives.
And suddenly, I felt like I was watching this movie for the second time.
Two or three years ago, the public ran with exactly the same frenzy to the 80:20 routes. Even then, they promised that everything was simple: "The market will only go up," "Everything will be fine until the population is full," and so on.
Some warned that reality could change, but the marketing promises were stronger than the facts on the ground.
Then reality set in. Interest rates soared, financing became more expensive, and hundreds of investors discovered that the shiny promises couldn't handle the real world.
I fear that some investors are about to make exactly the same mistake today, only in a new guise.
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Even during the construction phase, I hear too many sentences like: "They promised us another 25 square meters," "The developer signed off on parking and a warehouse," "The plan has already been approved.".
But those who really know the market know that the area is much more complex.
In addition, high interest rates and the erosion of developers' profitability are causing them to reopen the conversion agreements, sometimes just months before the building is demolished. What was seen for years as a closed promise is suddenly back on the negotiating table.
Anyone who buys an apartment today just because of a dream that they are selling for another ten years may find that promises are one thing and reality is another. One small mistake in construction clearance can cost you 300,000 shekels of equity that is wiped out in an instant.
This doesn't mean that you shouldn't invest in demolition and construction. Quite the opposite. In my opinion, urban renewal is the biggest engine for improving the real estate market in the coming decade.
But that's exactly why we must stop buying promises, and start buying deals that make sense. We must know how to distinguish between real economic feasibility on the ground and a marketing presentation.
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This is exactly why I decided to open the special urban renewal seminar. Not to teach you dry definitions, but to give you basic tools: How a smart investor professionally reviews a clearance-construction deal before spending a single shekel.
In a short-term workshop - on Mondays, Tammuz 27 and Av 5 - which can be listened to by phone or viewed via Zoom, we will learn how to correctly read a compound, what 7 tests must be performed, how to reject weak transactions and how to understand whether the returns you are promised are even realistic.
This course costs only 288 shekels (up to 3 payments of 96 shekels). You pay less than 100 shekels a month to receive a lesson that will prevent you from losing hundreds of thousands of shekels in a second.
If we've learned anything from the 80:20 illusion, it's simple: You don't buy a dream. You buy a deal.
The number of places is limited, so hurry up and register.. To register: Click here
