Investment Property in Israel: Short Term Rentals
For thousands of years, Jews, wherever they were, said, “Next year in Jerusalem,” at their Passover Seders.
No matter how much passion infused those words, for most of them, visiting, let alone owning property in Jerusalem was just a dream. But today things have changed. Thousands of apartments in Jerusalem are owned by Jews everywhere, often who use them sporadically—perhaps during the holiday season—while most of the time the apartments lay empty.
Jerusalem real estate is pricy. That means that homes in the Holy City are priced out of bounds of most potential homeowners. But some real estate mavens find that listing their Jerusalem homes with Baruch Haba is a convenient and fiscally-savvy way of offsetting the high price of some mighty expensive real estate.
Over the past decade or so, the short term rental market in Israel, in which apartments or homes are rented to tourists for short periods, has been steadily climbing. The concomitant boom in Israeli tourism is the main reason. With hotel room shortages constantly cropping up, short term rental apartments also offer comfortable accommodations at a fraction of the cost.
Giving Back: Investing in Tourists
Jerusalem homeowners are jumping on the bandwagon and taking advantage of this new investment property in Israel industry. Home purchases are that much more affordable after being let to tourists at times when those homes would otherwise be empty of inhabitants. Tourists are thrilled to have a comfy and independent alternative to predictable but run-of-the-mill hotel rooms. In other words, it’s a win-win situation for absentee homeowner and tourists alike.
It’s true that hotels offer certain amenities that you can’t get from a short-term rental, such as bellboys to schlep your luggage, daily maid service, and onsite restaurants. But for some tourists, that’s the whole point: a short term rental gives you freedom, oodles of space, and the ability to cook your own meals, according to your own tastes and pace. Short term rentals are a boon to travel with desirable amenities at a fraction of the cost of a hotel stay.
More and more absentee homeowners are waking up to this reality and contacting Baruch Haba to list their properties. Popular short term rental locations in Israel include Jerusalem, Tel Aviv, Netanya, and Ashdod. The annual returns for short term rentals run 30% above returns from long-term rentals. Owners can charge double during the holiday seasons, such as during the week of Passover. Owners can also make sure they have their apartments for themselves when they want them.
The market focus for short term rentals includes both tourists and businessmen. The apartments most in demand are those that suit the needs of the short term visitor. For example, an apartment in a coastal city should be no more than a 10-minute stroll from the beach, while a Jerusalem apartment should be the same distance from the heart of the city. A businessman will want digs in close proximity to the Diamond Exchange in Ramat Gan or to the business center of Tel Aviv. But, while most short term renters want to be close to the beach or the city center, don’t be put off by this when thinking about listing your home as a short term rental.
A significant number of potential renters want an apartment close to their children who live in Israel. Apartments should have all the amenities of home and be both comfortable and attractive.
If you’re a homeowner in Jerusalem or Tel Aviv, looking for a way to offset your mortgage and maintenance costs, it pays to contact Baruch Haba to find out how you can list your home as a short term rental. If you’re thinking of making a trip to Israel this year, but not sure if a short term rental is your style, why not check out Baruch Haba’s reasonable hotel and short term rental options and compare them online, from the comfort of your home?
Did You Know?
Estimates put the number of premium empty Tel Aviv apartments with foreign owners at somewhere between 2,000-3,000 apartments. Owners spend maybe three weeks a year in their Israeli homes. Right now, only around 15% of these apartments are rented out to the tourist trade, while the vast remainder stays uninhabited for the other 49 weeks of the year. There is certainly a great deal of untapped potential here.