How to Generate Income on Your Properties on Jerusalem
A lot of our American clients have recently been inquiring as to what options they have to make some money off of their properties when they are not being used. Whether you’re buying a property for the holidays, vacation, or to live in for 6 months of the year, your property doesn’t need to sit empty and cost you money while you are away.
Renting out apartments while they are not being used by their owners is a very common practice, especially in a big and highly sought-after city like Jerusalem. While there are no right or wrong answers, we have put together some information related to renting that can help you better understand your options.
-Short-term rentals within the last couple of years have become quite in-demand by travelers, students, and even locals. Many people have turned to platforms such as AirBNB to find a budget-friendly place to stay for a little while.
-The length of short-term rentals varies from just a few days to 3 + months. These rentals work best in central locations like the City Center and surrounding areas. They do exist in neighborhoods like Baka, Katamon, and the German Colony, though they will not generate as much money.
-The condition of the unit will dictate the amount of money you can make off of your short-term rental. Parking, an elevator, sukkah balcony, and air conditioning/heating are significant factors in determining a rental price.
-Short-term rentals are the most in-demand during the summer, high holiday season, and Channukah. Off-season the occupancy could be infrequent, and the rental prices would be lower.
-Short-term rentals require quite a few expenses in order to be maintained. Generally speaking, maintenance is high on short-term rentals because of the amount of people in and out of the unit successively.
-In addition to routine maintenance, fees such as property insurance, Va’ad Bayit (the building management fee) and Arnona (the municipal tax), and bills, namely water, gas, and electricity, are the owners’ responsibility to pay.
-A fantastic option to consider when renting out your unit short-term is hiring a property management company. The company will take care of all things A-Z having to do with the rental, including routine checks of the unit, taking care of any maintenance issues that need fixing, handling the turnover between occupants, and even finding occupants for the unit. Owners can remain updated and rest assured that everything is running smoothly at all times without having to do any of the work. Management companies charge a monthly fee for their services, they also charge approximately 15-20% of each short-term rental.
-When renting out a property you must be sure to adhere to all Israeli government regulations specific to short-term rentals; a tax specialist would be able to best assist in this process.
-It is important to choose a short-term tenant carefully, and your lawyer must be consulted before any rental is finalized.
-Long-term rentals are considered to be at least 1 year long.
-Long-term rentals are a much more simple process, due to the less involvement needed in maintaining the property and dealing with tenants.
-Supervision on long-term rentals is very minimal, especially if you use a property management company.
-All bills, such as Va’ad Bayit, Arnona, water, gas, and electricity, are generally paid by the tenant. The owner must pay for any reasonable maintenance issues that arise, as well as for the property structural insurance.
-Long-term rentals generate a respectable amount of money, with prices about 15-20% higher this year than last, due to high demand and lack of supply.
-Long-term rentals are considered to be quite stable, with more of a need for them on an ongoing basis and little to no empty time between tenants.
-A factor to bear in mind with long-term rentals is that you won’t be able to use them as you please over the holidays or for vacation.
-It is important to choose a long-term tenant carefully, and your lawyer must be consulted before any rental is finalized.
Again, there are no right or wrong answers here; it all comes down to personal preference and what works best for your situation. CapitIL’s Director of Sales, Ben Levene, believes that long-term rentals are generally a better option for foreign owners who are reliant on the income due to the more stable income and convenience of the process. His thoughts differ depending on the needs of the property owner.
Ultimately, you will need to weigh the pros and cons of each option to decide what is the best route for you. We at CapitIL, along with other specialists that we work with, deeply understand the long and short-term rental processes and would be happy to assist you in whichever option you decide.
To discuss your rental options today, please e-mail email@example.com, or call Ben at +972-53-822-4336.
*This information is accurate as of November 15, 2021.*