Is it safe to invest in an up and coming Jewish community?

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  • #1668978

    Lightbrite
    Participant

    If you are a newbie to real estate investing and are investing your life savings, is it safe to buy a fixer upper in an alleged up-and-coming Jewish community?

    Has anyone bought such a property and unfortunately the community never grew to the size that people are hyping it to be?

    Thank you – serious question – looking for advice

    Thanks!

    #1669008

    Meno
    Participant

    I’m no investment expert, but I don’t think it’s a good idea to invest your life savings into something like that.

    As a general rule: the higher the potential returns, the higher the risk. If it were just easy money everyone would do it.

    #1669030

    Freddyfish
    Participant

    Aka Toms River!!!!

    #1669033

    Gadolhadorah
    Participant

    Not clear if your question refers to a property where you plan to live and are considering its long-term resale value or you are looking at such a property purely as an investment. Clearly, you NEVER put your life savings into any single asset or asset class and you want to maintain a diversifid portfolio. However, if you have a long-enough time horizon and have sufficient funds, no reason not to purchase such a property if you are reasonably confident about the future growth opportunities. However, if this is purely a financial investment, why does it matter whether the area is “an up and coming jewish communihy” or just any community with growth potential.

    #1669064

    Lightbrite
    Participant

    Seriously asking for a friend…

    She wouldn’t live in it. Just hopefully fix it up and rent it out. Then let the property increase in value b’esrat Hashem.

    A wealthy real estate investor gave her the idea. She was planning on spending her money on a property to live in in an already hot community. This investor suggested buying a small condo or something for herself in her established Jewish neighborhood of choice, and then spending the rest of her savings on a house in a neighborhood with a new kollel and Chabad.

    I don’t want to be a downer, but this investor has millions to risk. It might work and might not. It’s a risky first home to buy..also, that’s also owning two homes. It’s not my money or my life, but I don’t feel right about supporting her 100% if she decides to risk it. I know I could be wrong. But still… wondering if I’m overreacting.

    #1669066

    Lightbrite
    Participant

    Gadolhadorah: Good point. The purpose was to make a smart and lucrative financial move. She doesn’t need to invest in a Jewish community. I wonder if this real estate investor has his own agenda too. His wife would be the realtor and they’re obviously hyping this out of town area. Supposedly Jews arw are moving from the big city (not in NY) to live there.

    #1669067

    Lightbrite
    Participant

    Btw, when people do these real estate purchases and portfolios, who are the financial advisors? Who would you consult with to make the financial move?

    Is this a question to take to the bank if you’re not planning on getting a mortgage?

    #1669069

    Neville ChaimBerlin
    Participant

    To invest your life savings in one thing is not safe no matter what it is.

    I guess the real question is if it’s a low risk investment if it’s a successful up and coming community. Obviously, at some point houses in Monsey cost the same as normal up-state homes, and now they’re obscene. So, I could see why someone would want to get in on that. In reality, I think by the time you know it’s going to be a successful community, it’s too late.

    #1669082

    ZionGate
    Participant

    My 2cents is that one should never, ever risk life savings on anything. I’ve known some very smart people in my life who’ve gotten burned. Even if the investor is on the up and up, circumstances can, and many times do change, and nobody short of a prophet can predict that. I’m sure that successful business people, most who’ve taken risks to achieve success, will never advise risking everything you have.

    #1669091

    ZionGate
    Participant

    ….. and if this is your friend’s case, then just by imagining myself in her shoes, I’m very uncomfortable to say the least.

    #1669104

    WinnieThePooh
    Participant

    real estate agents always have an agenda- it is in their best interest to hype a community so that prices rise and they get a bigger percentage. Remember that they are looking to earn a deal for themselves, they are not doing it for the good of the buyer or the seller.

    #1669110

    Sam Klein
    Participant

    The only city that is safe to invest in real estate is yerushalyim it’s an eternal investment that can’t go bad and you will already have a home paid up for when mashiach comes. Start thinking about it and make the investment.

    #1669115

    Avi K
    Participant

    When the Jews are forced to move on prices will fall. Invest in Eretz Yisrael.

    #1669126

    Abba_S
    Participant

    If it’s a condo I would strongly urge you/her not to invest. Unexpected repairs may come up and maintenance will exceed rental income also the apartment may lay vacant for a few months and you will have to pay maintenance even though there is no rental income.
    Satmar built townhouses in Bloomingburg in upstate NY which are not selling and going into forclosure, is an example in NY of a community that was built and Jews moved in and then for what ever reason others didn’t follow.
    If this investment is so great why does the broker need you to invest? He can borrow money from the bank. The reason is the risk is to great and he is just looking for a commission, which he will earn when he sells it. In short there is a good chance that you will lose some or all of your investment in this transaction, can you afford the loss.

    #1669129

    ZionGate
    Participant

    Sam Klein, Avi K , *****AAAAA

    But even for there, a person isn’t allowed to leave him/herself entirely empty if it can be helped. But yes, prices will drop here and pretty soon too.

    #1669459

    Neville ChaimBerlin
    Participant

    “Satmar built townhouses in Bloomingburg in upstate NY which are not selling and going into forclosure, is an example in NY of a community that was built and Jews moved in and then for what ever reason others didn’t follow.”

    I believe Mt. Kisco was also hoped to evolve into a rural, frum outpost, but it didn’t really catch on either.

    The point is, lightbright, if you look only at places like Monsey, Lakewood, and Kiryas Yoel, it might seem like whenever the Jews decree that a place shall be an up-an-coming community, it’s a big success and housing prices skyrocket. But, this isn’t really the case as there are many failures that people just don’t talk about.

    #1669520

    zahavasdad
    Participant

    Toms River is not the same as others, its next to Lakewood, so Likely at some point the communities will join and you can still have access to the lakewood services

    However this would not be the case in more isolated communities and thats why I feel Scranton never really panned out, Even though housing is cheap there its too isolated from other communities to really make a foothold

    #1669515

    Lightbrite
    Participant

    Okay so update, the money is not life savings per se, according to my friend because she will baruch Hashem be okay if G-d forbid something happens… that’s what she said. I shared this thread with her.

    Thank you for your advice and tips 🙂

    #1669507

    Lightbrite
    Participant

    Thank you all and Neville ChaimBerlin.

    Good point. People don’t talk about the lost investments and communities that did not boom.

    #1669748

    Lightbrite
    Participant

    If you buy a dirah in Yerushalayim, then how do you make money? Renting it out? Do you need a property manager in Israel? How do you know your place is being taken care of and such? Are there annual Israeli property taxes?

    #1669795

    Gadolhadorah
    Participant

    I think all the posts point to the same conclusion as to the wisdom of investing in a yiddeshe version of a “Field of Dreams” shteitel. You can build it but they won’t necessarily come. Caveat emptor!!

    #1670477

    Neville ChaimBerlin
    Participant

    Scranton is another good example, ZD. I forgot about that one.

    Is it too early to put Rochester on the list?

    #1670493

    Talmidchochom
    Participant

    What a silly question. How did Fakewood get to be what it is today?

    #1670526

    Lightbrite
    Participant

    Abba_S: Thank you for your advice… Wondering, I thought condos are more affordable to maintain than single-family houses because the HOA pays for outside repairs, lawn-care, and such.

    The only concern that I have about an older condo is the pipes bursting or something C”V. There’s that issue of old brittle plastic or metal, or whatever material it was that many older homes still have. Though, this is a concern for SFH and condos of the same age.

    You brought up a great point of having to pay HOA fees even when the house is unoccupied. Also, yes, if there are repairs to be made, then it’s paying for those repairs, plus HOA fees, while not earning any rental income.

    #1670644

    Mammele
    Participant

    Who can forget about Bayswater in Far Rockaway? Was supposed to be Satmar/Chasidish. I think Hurricane Sandy was the last straw, but it did evolve after attracting a more “modern” crowd so it’s not a total failure/loss.

    Bloomingburg OTOH was/is a private investment (Satmar came in afterwards) and as a community I thought it’s pretty successful, albeit with rentals. It was complicated with all the legal shenanigans and expenses, but I wouldn’t write it off yet.

    #1670647

    Mammele
    Participant

    IMHO the takeaway is that with the high cost of living in Brooklyn and elsewhere, most “satellite” communities are doing great, new outposts are much more of a risk.

    #1670654

    funnybone
    Participant

    How do you know if its up and coming? Just taking the brokers word?

    #1670663

    WinnieThePooh
    Participant

    ״If you buy a dirah in Yerushalayim, then how do you make money? Renting it out? Do you need a property manager in Israel? How do you know your place is being taken care of and such? Are there annual Israeli property taxes?״

    If you buy real estate in Israel, you can rent it out short term as a vacation apartment (higher rates, daily or weekly, bigger headache because always looking for tenants, need to provide appliances and furniture at a high standard, and need to have it cleaned regularly for new guests) or long term (lower monthly rent, but more steady, easier maintenance and minimal investment) for immediate income, and hang on to it and sell when prices are higher (real estate in Israel seems to always be going up, there is a big housing shortage despite the current housing starts).
    A property manager is a good idea if you plan to rent- you would need someone to be on top of finding tenants, arranging for the rent payments, maintenance/repairs when needed, which may be hard to from afar.
    There is a one time purchase tax of 8% for which foreign residents are not exempt.
    There is arnona, Israel’s version of municipal taxes, charged every month or two, usually paid by the tenant , as are other utilities and building maintenance fees. If you are not renting it, you would have to pay all of the above. Some places will give you a one time exemption if you don’t live there, other places have threatened to charge higher rates for empty apartments in order to discourage the phenomenon of ghost neighborhoods- “communities” where homes are owned by foreign investors and are left empty.

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