I don't think real estate is possible for me. (19 years old)
Hello everyone,
My name is Omer and I'm 19 years old from israel. I started reading and learning about real estate about 2 years ago, and since then I'm looking to buy my first deal with my parents. A few weeks ago I started learning the market, and I start to think that its not possible to buy real estate here. Let me explain with some numbers.
My (Our) budget is about 450,000-550,000 shekels, and there are two cities in israel where you can find deals in this price.
There are 2 big problems:
1. Rent rates are very low. The expected rent from houses in this price is about 1800-2200 shekels.
2. Mortgage rates are high. One of the biggerst problems is that my dad can take up to 15 years mortgage, and with my calculations for 200,000 mortgage (and 250,000-350,000 down payment) the monthly payments will be around 1500-1600 shekels, and with repair costs, vacancy, etc - the monthly payments will be around 1900 shekels.
I started talking with real estate agents (which is hard enough for me, because I don't sound very serious in their opinion :)) and reading articles about the prices of real estate in israel - prices have increased about 150% in the last 8 years and have never been more expensive here.
In summary, I don't know what to do. Options I've thought about:
1. Waiting for prices to go down. I've heard it more than once that you make your profit when you buy, not when you sell. Waiting might be a good idea, but prices just keep going up and all I did in the last 2 years was to wait.
2. Starting to look for deals anyway and trying to find cheap deals that can be rented for the highest amount - the only possible deals in my opinion.
I know I'm young, but I don't see how my dream is even possible. When ROI and cash on cash rates are so terrible (ROI is about 4%) it seems that the only option is waiting, and I feel I was "paralyzed" for two years, and stopping now is just not an option for me.
What should I do? Do you have any ideas what action should I take? To wait for the prices to go down or to start looking for properties anyway? I'm afraid to buy a house for 550,000 which cannot be rented for more than 1800, How can I make sure I don't do that mistake?
Thank you very much for your help!
Omer.
P.S. Sorry for the long post and for any spelling mistake that might have occured.