An inquiry about a specific penthouse at the commercial center in Ramat Beit Shemesh Aleph is more than just a question about price and room count; it’s a query about investment performance. To evaluate such a property, a savvy investor looks beyond the surface details and focuses on one key metric: the net return on investment (ROI), or more specifically in real estate, the capitalization rate (cap rate).
Step 1: Gather the Core Data
First, you need the fundamental numbers for the property.
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Purchase Price: What is the final price for the penthouse? Let’s assume, for example, it is 3,000,000 NIS.
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Number of Rooms: A penthouse in this location is likely to be a 5 or 6-room apartment (4 or 5 bedrooms), designed for a large family.
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Potential Gross Rental Income: Research the current market rent for a similar-sized premium apartment in RBS Aleph. Let’s estimate this at 8,000 NIS per month, or 96,000 NIS per year. This is your Gross Annual Income.
Step 2: Calculate Operating Expenses
Your true income isn’t the gross rent. You must subtract all the expenses associated with owning the property.
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Va’ad Bayit (Building Fees): Estimate ~300 NIS/month = 3,600 NIS/year.
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Arnona (Municipal Tax): For a large penthouse, this could be ~1,000 NIS/month = 12,000 NIS/year.
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Maintenance & Repairs: A standard estimate is 5% of the gross rent = 4,800 NIS/year.
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Property Management (if applicable): Typically 8-10% of gross rent. Let’s assume self-managed for now.
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Insurance: ~2,000 NIS/year.
Total Estimated Annual Expenses: 3,600 + 12,000 + 4,800 + 2,000 = 22,400 NIS.
Step 3: Calculate Net Operating Income (NOI) and Cap Rate
Now, you calculate your profit before any loan payments.
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Net Operating Income (NOI): Gross Income – Expenses = 96,000 – 22,400 = 73,600 NIS.
The cap rate is the NOI divided by the purchase price. It represents your annual return as a percentage.
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Cap Rate: (NOI / Purchase Price) * 100 = (73,600 / 3,000,000) * 100 = 2.45%.
The final question is about “net return after tax.” This would further reduce the return based on Israel’s income tax brackets for rental income, which vary depending on the total amount and the chosen tax track. However, the 2.45% cap rate is the crucial, pre-tax figure that allows you to compare this investment against any other property or investment type.
Too Long; Didn’t Read
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To evaluate a penthouse as an investment, you must calculate its capitalization rate (cap rate).
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First, determine the purchase price and the potential gross annual rental income.
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Second, subtract all annual operating expenses (Arnona, Va’ad Bayit, maintenance) to find the Net Operating Income (NOI).
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Finally, divide the NOI by the purchase price to get the cap rate, which is your pre-tax annual return percentage.
