Has commercial real estate tucked its tail and moved to work from home? Does a small apartment cost more than a million shekels? How can you still invest 150,000 shekels and enjoy high returns in the short term? We Are Here to Help
The past year has turned everything upside down when it comes to household investments. Many families in Israel, who have managed through long years of saving to accumulate amounts considered small by banking standards, now face what appears to be a broken trough. Solid and secure investment channels, particularly the real estate sector, have undergone and continue to undergo upheavals with no clear end in sight. Nevertheless, even those who are not investment experts understand that leaving money in a checking account is not a default option. What options are available to those seeking to invest and achieve high returns in a relatively short timeframe?
The most traditional investment channel, “money in bricks,” has become a matter for the wealthy over the past decade. The smallest apartments in attractive areas have become expensive, and the initial capital required to purchase an investment property has increased significantly. Even peripheral areas are “enjoying” price increases, with older apartments in poor condition selling for around a million shekels. When factoring in initial renovation costs and ongoing maintenance—the return from such an asset decreases substantially.
Until just a year ago, 150,000 shekels was considered respectable initial capital with which one could purchase a small office or small shop, an investment that would yield a nice return within a few years. Various publications spoke of guaranteed returns of 6%-9%. The COVID-19 pandemic slapped investors who purchased small offices in the face: small businesses operated by independent professionals retreated back to homes, large companies reduced open-space areas and moved their employees to homes, and it is unclear when they will return to the traditional work model.
Let’s be honest: if someone offered you an apartment for half a million shekels in Netivot or Kiryat Shmona while you live in the center of the country, would you purchase the property without visiting it? Probably not. How would you monitor the property’s condition on an ongoing basis? How would you ensure that the management company holding your money is indeed ensuring that your property maintains its value? True, there are success stories in overseas real estate, but they are typically in established areas with a stable socio-economic population, where real estate prices are correspondingly high, and the initial capital required to purchase them is much higher than 150,000 shekels. It is also difficult to invest when maintenance and legal costs can consume all the profit.
Many Israelis are reluctant to invest their money in the stock market. Stock market declines are covered with great media fanfare, but the quiet successes of investors pass “under the radar.” The reason is simple: those who know want to keep the knowledge to themselves, and those who don’t know take risks. A prudent first investment in the capital markets is an investment made with the guidance of an investment bank that examines and screens companies and selects which ones to accompany and which to recommend to its clients for investment. Or in one word: EXITEAM.
EXITEAM guides Israeli technology companies with proven business models toward an IPO on the stock exchange. Investing in a company just before its IPO, through convertible bonds, may result in significant value appreciation at the moment of the IPO. Bondholders become shareholders in the company and can realize the shares at any time. The advantage of EXITEAM over a startup is the fact that you are not investing in a product idea but in an existing product and an active company.
Would you like to consult with EXITEAM experts?
