One of the definitions I found for the word bargain or bargains in the dictionary, is "a name for a good thing bought cheaply", and if I unite and associate it with real estate, bargaining is actually an asset whose face value is significantly lower than the market average.

An asset that is a bargain is the dream of every real estate investor, for which every investor strives, buys an apartment at a low price, makes a quick renovation, and “bang!” sells it at a high price – the so-called exit.

It's nice, only in this way, there are a lot of expenses, running and one big uncertainty.

Anyone who knows the real estate business and tax laws in Israel, (every NIS that goes into your pocket, the state takes some of it), understands that it is very difficult to make exit transactions that will ultimately return you a good profit (and when I speak of a good profit I mean over 100,000 NIS net), after all, this is what we want at the end of the day, after all the headache it requires.

Bargain means the price of a property that is at least 30% lower than the market price.

But even if you found an apartment at a price that is 30% lower than the market price, the road to exit is long and full of expenses. At the time of purchase you are required to pay 8% purchase tax (assuming this is not the first apartment you own), to invest in the renovation another amount of about 100,000 NIS, then in the sale to pay another 25% betterment tax, and I have not yet talked about the costs of attorney's fees in buying and selling and brokerage costs in buying and selling if any, and finding a home remodeler, buying materials, and the time and fuel you spend, all of which will greatly deduct you from the profit in the deal.

If we make a small simulation of an exit transaction, it will be clearer, let's take an example of an apartment whose market price is NIS 1 million, and we closed a deal with a purchase price of NIS 700,000.

Then the list of expenses will look more or less like this:

700,000 NIS The cost of the apartment

56,000 NIS purchase tax

NIS 4,095 (which is NIS 3,500 plus VAT) the cost of attorney's fees for the purchase

NIS 4,095 (which is NIS 3,500 plus VAT) the cost of attorney's fees at the sale

NIS 16,380 (which is NIS 14,000 plus VAT) the cost of a brokerage fee for the purchase

NIS 16,380 (which is NIS 14,000 plus VAT) the cost of a brokerage fee in the sale

NIS 100,000 renovation cost

NIS 2,000 different costs (such as fuel, land registration, municipality and more)

The total amount of expenses 898,950 NIS

You can, of course, save the cost of a broker's fee for a sale and sell it on your own (I do not intentionally lower a broker's fee for a purchase because the chance that he will find you the bargain is immeasurably greater than what you will find yourself), and maybe also a little to reduce the renovation costs, but to exit this type of transaction of about 100,000 NIS, you will have to sell the apartment for 1,040,000 (40,000 NIS above the market price) because at the time of the sale you will have to pay 25% betterment tax (calculated according to 25% of the difference between the sale amount and the purchase amount plus all expenses, i.e. in my example 898,950 NIS if you kept all receipts ).

That is not simple, and the above calculation is based on the fact that we found a buyer immediately (immediately meaning after the renovation is completed), if the sale is not made immediately, for each passing month we will also have to pay property tax.

To make a successful exit deal, there are many components, first, you need to find a bargain (which is the hardest part of the story) and to know that it is a bargain, and you need to do market research.

Market research has several purposes:

• Understand at what price properties with similar characteristics were sold to know that this is a bargain

• Understand for how much the property can be sold after renovation and in what time frame

• Understand who the target audience is

Once the bargain is found, one should take a good look at the apartment (perhaps with a designer) and figure out what to renovate and then bring in a contractor or two to estimate the cost of the renovation.

And at the end of the story, we have to keep our fingers crossed and hope we sell at the price we wanted.

I, as an investor in the real estate market for over a decade, do not believe in exits as a way of working, it can be done once in a while but not as a way of working.

I see investing in real estate as a long-term investment, like a savings plan, assets that you will hold for years, their value will go up, they will give you financial security, passive monthly income, independence from one employer or another, actually control over your life.