Spoiler: The smartest financial choice might surprise you.
You’re browsing online and find your dream home in Netanya—a beautiful property priced at around 3 million shekels. Now, you’re wondering, “Should I buy this home or just rent it?”
In Israel’s current real estate market, especially in vibrant cities like Netanya, this decision isn’t as straightforward as you might think. Let’s break down this dilemma step-by-step and see what’s truly better for your wallet in 2025.
Buying a Home in Netanya: What Does it Actually Cost?
Imagine this scenario: You decide to buy your dream home priced at approximately 3 million shekels. Here’s what your financial breakdown might look like:
- Initial Payment (Equity):
To purchase a property in Israel, you’ll typically need at least 25% as a down payment (also called equity). For a 3 million shekel home, that’s roughly 750,000 shekels you’ll pay out-of-pocket immediately. - Mortgage Commitment Explained:
Since you’re paying 750,000 shekels upfront, you’ll need a mortgage for the remaining amount—around 2.25 million shekels. Spreading this loan over 30 years results in monthly repayments of approximately 12,000 shekels each month.
That’s a hefty monthly expense, and it doesn’t include maintenance, property taxes (arnona), or unexpected repairs.
Renting the Same Home: A Smarter Option?
Now, let’s say you decide to rent this exact same property instead:
- Zero Initial Investment:
When renting, you don’t have to provide any large upfront payment (other than perhaps a deposit, which is minimal compared to the down payment required to buy). - Lower Monthly Payments:
Rent for a home valued at around 3 million shekels typically calculates based on what’s known as a rental yield. In Israel, the average rental yield is about 3% per year. But what exactly is rental yield? Rental Yield Explained:
Rental yield is a simple calculation used by investors and landlords to measure their annual return from renting out a property. At 3%, your annual rent for a 3 million shekel property would be about 90,000 shekels per year. Divide that by 12, and your monthly rent comes to around 7,500 shekels.
Let’s quickly compare monthly payments:
- Buying: ~12,000 shekels per month
- Renting: ~7,500 shekels per month
Renting saves you about 4,500 shekels every month compared to buying—significant savings that can add up quickly.
Investing the Difference: Maximizing Your Money
Here’s where renting gets even more attractive: instead of tying your cash in your home, renting allows you to invest your capital in potentially higher-return assets. Remember the 750,000 shekels you’d have initially used as a down payment?
- Liquidity & Investment Flexibility:
By renting, that large sum remains available to invest elsewhere—perhaps in stocks, bonds, or another real estate investment. Such investments could offer a higher return on investment (ROI). ROI Explained:
ROI, or return on investment, is a financial metric used to measure how profitable an investment is compared to its cost. For instance, if you invest 750,000 shekels and make a 10% annual ROI, that’s an extra 75,000 shekels earned every year—money you wouldn’t earn if it’s stuck in your home’s equity.
Bottom Line: Buy Investments, Rent Your Home
So, what’s the big takeaway?
- Yes, buy property—but for investment purposes:
Owning real estate in Israel can be extremely lucrative. But consider buying properties that can generate income rather than tying your largest investment to your primary residence, which doesn’t generate cash flow. - Rent your home to keep flexibility and cash available:
By renting your primary residence, you’re preserving flexibility, maintaining cash liquidity, and keeping monthly expenses lower.
Smart investors often say, “live where you rent, invest where it makes sense.” This approach maximizes your financial growth, reduces financial stress, and could dramatically improve your quality of life.
Too Long; Didn’t Read (TL;DR):
- Buying a 3 million shekel home requires a large down payment and higher monthly payments.
- Renting the same home significantly lowers monthly costs and frees your cash for other investments.
- Investing your savings can provide greater returns (ROI) compared to locking money in home equity.
- Optimal financial strategy: Rent your primary home, buy properties for investment purposes.
Making informed choices about buying versus renting can completely change your financial future in Israel.
Now the decision is yours—what will you choose in 2025?
