Buying through a purchasing group discounts the property about 20 percent and sometimes even more.
Purchasing groups for Olim (new immigrants) are forming in order to buy nice homes in upcoming areas at attractive prices. The groups are being formed by Eli Hamami and Shimon Galaventztiz, who have much experience in setting up similar groups in Ramat Shlomo. Beni Ayish will act as the managing company for the groups of olim.
Hamami and Galaventzitz realized that while the real estate market abroad is in a catastrophic state, the market in Israel is - for the most part - holding its own and even thriving in some areas. This is a worst case scenario for many olim, who have limited funds to buy a home. Hamami and Galaventzitz realized that the only solution to attain cheaper houses without compromising on quality and nice communities would be to form a purchasing group (kvutzat rechishah in Hebrew). Israelis have been buying through purchasing groups for years, so Hamami thought that it is time that olim benefit from the same type of discount. The areas that are being considered are Srigim, Ramat Beit Shemesh and Givat Zev.
What is a purchasing group?
It is a group of buyers, organized by a management company, that buy the land and build the homes together.
How does a purchasing group save money?
A purchasing group saves money in two areas – taxes and developer’s profit. There is a purchase tax exemption (petor mas richisha) for purchasing groups, which is a savings of about three to four percent There is an additional tax exemption of the Value Added Tax (15.5%) on the land. There is also no developer’s profit, which could be about 20 to 25 percent. The managing company of the purchasing group usually only takes about five to seven percent on the total cost of the house, considerably less than what the developer would take.
The purchasing groups are currently forming to build residential communities in Ramat Beit Shemesh, Srigim-Leion, and Givat Ze’v. In Ramat Beit Shemesh the plan is to build apartments and townhouses. Just a five-minute drive away from there is another plan to buy land for private homes in the pastoral Srigim–Leion. North of Jerusalem in Givat Zev, a group is forming to build apartments, townhouses and private-standing villas. Hamami and Galaventzitz believe that Givat Ze’ev is an ideal area for many olim since it is close to Ramot and the hi-tech park Har Hotzvim as well as a 15 minute drive from Modi’in and a little more than a half an hour drive from Gush Dan.
Pros and Cons: Buying through a purchasing group discounts the property about 20 percent and sometimes even more. For instance, in Srigim houses are sold for a price between $400,000 - $500,000. The purchasing group would be able to build the same size houses at a price of about $330,000. There is no danger to the money since there is no developer that could run off with the buyer’s deposits. The downside is that you have to wait until a group is formed in order to go ahead. All in all, the benefits outweigh the disadvantages.
If any oleh, new or old, is interested in receiving information about this purchasing group, please be in touch with me.
Baruch Finkelstein is an owner/broker of Remax Center in Jerusalem. The office is in the shopping center of Ramot and Baruch has agents that service all of Jerusalem.
cell: 972-545-251-219
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baruch.finkelstein@remax.co.il
www.remax-israel.com/center