Finding a home with an attached, income-producing rental unit (yechidat diur) is a popular strategy in Israel for offsetting mortgage costs and generating passive income. While these properties can be found all over the country, certain types of locations are more likely to offer affordable options, especially those that fit the “old town or harbor” aesthetic.
Here are some types of locations and specific cities to explore.
1. Peripheral Development Towns
Many of Israel’s development towns, founded in the 1950s and 60s, were built with single-family or semi-detached homes on plots of land that allowed for expansion. It is very common for homeowners in these towns to have built legal (or sometimes quasi-legal) rental units in their basements or yards.
- Examples: Towns in the south like Be’er Sheva, Dimona, or Ofakim, and in the north like Afula or Kiryat Shmona, offer some of the most affordable real estate in the country. You can often find a small villa with an attached unit for a fraction of the price of a standard apartment in the center.
2. Historic and Mixed Cities
Cities with historic old towns and a blend of Arab and Jewish populations often have unique properties with courtyards and older buildings that have been subdivided into multiple living units.
- Akko (Acre): A historic Crusader port city with a stunning Old City. It’s possible to find unique properties here that could include a separate unit. The city is undergoing significant revitalization.
- Jaffa (Yafo): While much of Jaffa is now very expensive, neighborhoods like Ajami still have older properties and a more affordable entry point compared to Tel Aviv.
- Ramla and Lod: These centrally located but historically working-class cities have older neighborhoods with diverse housing stock where properties with attached units can be found at a lower price point.
3. Zichron Ya’akov and other Moshavot
For an “old town” feel without being in a major city, the original moshavot (agricultural settlements) can be a great option.
- Zichron Ya’akov: Famous for its charming, historic main street, this town has a mix of older homes and newer developments. It’s possible to find older properties on larger plots of land that have a separate cottage or basement unit.
- Pardes Hanna-Karkur: This large town has a bohemian, rustic feel and a diverse range of properties, including older homes that may have an attached yechidat diur.
Important Legal Consideration
When buying a property with a yechidat diur, it is absolutely essential to have your lawyer verify its legal status. Many of these units were built without proper permits. An illegal unit can expose you to municipal fines and cannot legally be rented out, which would defeat the purpose of your investment.
