Question: How long has the company been active in the U.S real estate market, and how many investors have made transactions through you?
Answer: As of the beginning of 2016, Tsurel Estates (hereafter 'The company') has been involved in the U.S real estate market for five years and we have made 70 transactions on behalf of Israeli and American investors. The company is active in states with high-rental demand that demonstrates the highest potential for Return on Investment.
Question: Once the transaction is complete, who is the registered property owner?
Answer: The property is registered in State and Federal Land Records under the investor's/purchaser's name – or whoever he designates.
Question: How do you assess the property for sale?
Answer: That's an extremely important question! Firstly, our company purchases each property before offering it for sale to investors. That in itself says it all about the potential we see in the property. A professional assessment which examines the overall state of the property is carried out by an appraisal office. Checks include foundations; utilitie infrastructure – namely water, electricity, sewage and gas; inspection of walls to rule out termites; roof, lead paint etc. Once we receive the inspector's report, we decide whether it is financially worthwhile to renovate the property. Certain repairs, significant problems with the foundations, or if the roof needs fixing within the next five years, will be reason enough for us not to make the purchase.In addition, we take care to obtain all the rental licenses from the local county which testify that the property's infrastructure systems meet official standards. The inspection office gives a guarantee on all repairs that may occur during the first year. We will be happy to let you study the reports and licenses.
Age of Property
Question: Some of the properties you sell were built in the 1920's. Aren't they too old?
Answer: No! All over the U.S. you will find properties dating from that time period, which were built to last for 150 years. The building specifications are such that the house can be renovated to meet current standards. Indeed, there is great demand for renting properties built in the 1920's. As explained in the previous question, each property is subject to extensive inspection before purchase.
Question: How is the property price fixed?
Answer: USA real estate agents use the CMA tool – Comparable Market Analysis which compares the property for sale with similar ones in the same area which have recently been sold or are currently listed. Adjustments are made depending on the condition of the property and the cost of any repairs or renovations that may be needed.As opposed to popular internet sites, the CMA never values the absolute price of the property, rather it proposes a minimum price (below which the seller will make a loss) and maximum one (above which the buyer will make a loss), as well as the median and average prices in the area.
Question: What contracts will I have to sign, and in what language?
Answer: One in Hebrew and two in English.The Hebrew contract will be signed between the purchaser and the Company if the purchaser requests to transfer the funds to the title company via the CompanyThe contract states that the Company will immediately transfer the funds paid by the purchaser for the property to the company's United States account and then to the title company to be held in trust. At the time of signing the contract, the Company will also sign a Letter of Undertaking to the investor which includes:
1. A commitment to the payment of 12 month's rent as appears in the property profile
2. A commitment to cover the cost of any repairs required on the investor's property for the period of one year.
The two English contracts are:
1. Purchase documents listing all the details of the transaction for purchasing the property.
2. Closing Documents which summarize the entire legal process in which the property is registered in the United States in the name of the investor. Tsurel's real estate advisors will assist the investor throughout the whole process.
Question: What happens to my money once I deposit it with you? Is it safe? What guarantees does Tsurel Estates provide?
Answer: Title companies in the United States are entrusted with transferring ownership of the property and registering the investor as the legal owner of the property. The investor's money is transferred to the title company which holds it in a trust - escrow account until the ownership registration process is completed.In addition, the investor's money is protected by a title insurance policy that the seller purchases for the investor, in order to protect the transaction in case a third-party claims ownership. In disputed cases, the investor's money will be returned.
Question: Will I be required to file reports to both the Israeli Taxation Authority and the IRS and pay double taxation?
Answer: No. You are obliged to report to both the Israeli and US tax authorities, but the tax paid in the States is offset by Israeli taxes and therefor you only pay tax once.
Management Company and Tenants
Question: Can I trust the Management Company in the States and be assured that the tenants will look after my property and not cause a decrease in the value?
Answer: We have been working closely with our management companies ever since Tsurel Estates was founded and they have proven to be first-class, reliable and professional companies. For further details about their services, check out our website ('US Management Companies'), look them up on the internet or contact them directly via Skype, e-mail or by phone and take advice from them at any stage during the investment process. If you wish, we can arrange a meeting for you in the States with one of the management professionals.The management companies that rent out the properties on behalf of our investors carry out thorough screening checks on prospective tenants - credit, criminal, employment, rental and ownership history.The companies are given power of attorney to perform all necessary services on behalf of the investor – find tenants, prepare rental contracts, collect rent, eviction (if or when deemed necessary), repairs and renovations etc.Thanks to the reliable and professional management companies, we at Tsurel Estates and you the investor can sleep peacefully.
Renting out the Property
Question: How can I be sure that the property will be rented out in the long-term, for at least three years?
Answer: One of the most important factors we investigate before purchasing a property is rental demand in the area. We only choose properties in high-demand locations and, to date, we have never had a property vacant for more than a few of months.Our management companies are responsible for finding the right tenants and they have a vested interest in doing so in order to receive their monthly commission on the property.We make every effort to sign long-term rental contracts. We do not guarantee to do so, but it is certainly our goal.
My contact with Tsurel Estates
Question: Will I, the client, still be in contact with Tsurel Estates one year after the transaction?
Answer: This depends on what the client, who is the exclusive owner of the property, chooses. Tsurel Estates usually manages all details of the investment – repairs, tenants, licenses, taxes etc. We do not take any additional commission for these services, and you only pay for the cost of the actual work.
What happens after 3 years?
Question: I purchased a property and after letting it out for three years, I’d like to sell it. At this stage, you no longer act as brokers but I still need to cover the expenses until the property is sold (municipal rates, insurance etc). If it is not sold for an extended period, I will lose money. As such, is it only worth my while to buy a property if I intend to let it out long term, or can it be sold immediately if necessary?
Answer: We continue to manage the property after the warranty period, the only difference being that if the property is untenanted for a month, you will not receive any rent. Also, if any repairs to the property are necessary, you will be required to cover them. It is in our best interests that the property is let so that we receive an agency fee. We recommend that you do not sell the property for at least two years. However, as the owner of the asset, this is entirely up to you.
Why are the Americans not “jumping on this bandwagon”?
Question: If the return is indeed 10% or slightly higher and there is zero interest, why are American investors not taking immediate advantage of this opportunity? They are much wealthier, are familiar with the American tax laws and live in much closer proximity to the properties for sale.
Answer: As opposed to popular belief, not all Americans are wealthy. Most households in America survive on a hand to mouth income and a large part of the population lives in rented properties. There are in fact many Americans who have taken advantage of this wonderful opportunity and have benefitted for a substantial period of time already. Luckily, there is a prolific amount of property for those wanting to invest – and much profit to be made. So much so that investors from around the world are jumping on board, especially from China.
Does one need to go overseas in order to invest?
Question: Do I need to travel to the USA?
Answer: There is no need for you to travel to the USA. The entire procedure is done from Israel, with the assistance of our professional and reliable agents in the USA.
The location of the property
Question: Where are the properties that you are selling located?
Answer: The properties are located in Detroit, Michigan and the nearby cities. This area is experiencing a major reconstruction boom at present.