How ownerhood works
Ownerhood is an innovative platform that opens the real estate market for everyone and allows you to invest in real estate in any amount that suits you!
Choose a property to invest in and buy a slice
The property is leased and managed - you get your monthly rent payments
Sell your slice and realize capital returns
Choose a property to invest in and buy a slice
- You decide how much to invest in the property, starting at 50,000 NIS. Each property will have its own minimum amount.
- Your share of the property will be determined according to the portion of your investment from the total asset price. For example, if you invested 100,000 NIS in an asset that costs 2,000,000 NIS, you will own 5% of the property.
- At the same time, additional investors will join the investment, each in an amount to be chosen. Once we reach 100% of the investment amount, the transaction will be executed.
- Each of the investors will sign a set of agreements (that will be available for prior consultation) with an external lawyer who will represent all the investors in this asset.
- After signing the agreements, the investment money will be deposited in a dedicated trust account on your behalf until the transaction is executed and transferred to the seller of the property.
- At this stage, we purchase the property on your behalf and register you as the owner of the property in the Israeli Land Registry (Tabu).
The property is leased and managed - you get your monthly rent payments
- If a renovation is required in the property to maximize its value (predetermined as part of the investment transaction) we will manage the renovation with the help of professionals.
- Once the property is ready for rent, we will publish it, show it to potential tenants, select the appropriate tenants and sign the rental agreement.
- We will take care of the ongoing relationship with the tenants, the exchange of tenants, contact with the authorities and suppliers (municipality, water, electricity, gas, house committee) and the apartment insurance. In addition, we will be responsible for the daily care of the property through professionals in any fault and repair.
- We will collect the rental payments and divide them quarterly to you, investors, each investor according to his holdings, together with a detailed report.
Sell your slice and realize capital returns
- You can offer your share of the property for sale through the platform at any time, at the price that you set, for another investors to buy from you.
- Once you sell, we will handle the transfer of ownership and legal documents of the sale.
- After 5 years from the initial investment, the property will be sold in its entirety on the open market unless 100% of the owners wish to continue to hold it (in this case, the extension will be for an additional three years and so forth).
|"Only property" buyer||All other buyers|
|Investment||Investment in property||100,000||100,000|
|Individual Purchase Tax||1,620||8,000|
|Management and repairs||-500||-500|
|Net rent income||2,500||2,500|
|Net income for 5 years||12,500||12,500|
|End of period||Capital gain at 5% annual price rise||27,628||27,628|
|Capital gain tax||-5657|
|Net return at sale||127,628||121,971|
|Total return||Net return for 5 years (capital gain + rent income)||36,508||24,471|
|% Total return||% Net return for 5 years (capital gain + rent income) after taxes and fees||35%||22%|
|% Net average annual return (capital gain + rent income) after taxes and fees||6.2%||4.1%|
Legal Agreements in Ownerhood's transactions
Investing in a property through Ownerhood's platform involves signing three main agreements. The purpose of the agreements is to protect you in the transaction, to enable you to enjoy the rent payments without any worries, to realize the value of the property and all with full transparency. The agreements were written based on many years of experience in managing shared decisions and relationships between co-owners in real estate and backed by one of the largest law firms in Israel (GKH- Gross Halevi Hodak):
Shared ownership agreement
The agreement defines the binding relationship between the owners of the property, while setting a clear set of rules on how each owner must act - his rights and obligations:
- Allows you to offer your share of ownership for sale at any time and determines the sale of the property in its entirety after 5 years unless 100% of the owners wish to continue to hold it.
- Keeps your sole right for ownership of the property and prevents any dependencies on other owners.
- Appoints a trustee for the shared ownership agreement (the accompanying external attorney) and the decision-making mechanism in connection with the asset as necessary.
- Determines that the imposition of a lien or lien on the asset constitutes a violation of the agreement and enables the trustee by proxy to immediately sell the violator's rights in order to remove the attachment, for the benefit of all other owners.
Link to the full agreement: Shared ownership agreement
Services and management agreement
- Determines that Ownerhood will be the managing company of the property, will rent the apartment and take care of tenants during the period of ownership, manage the current contact with tenants, deal with property malfunctions by inviting professionals, collect rental income to a dedicated trust account in the name of the owner and distribute the rental money to the owners.
- Appoints the Ownerhood will handle the property in the name of the owners vis-a-vis the various authorities and suppliers - municipality, water, electricity, the gas company, house committee and more.
- Requires Ownerhood to submit a detailed report on the condition of the property once every quarter and with full transparency.
- In properties where renovation is offered as part of the purchase transaction, Ownerhood will manage the renovation process using professionals.
Link to the full agreement: Services and management agreement
Legal representation agreement
- An agreement in which you appoint an attorney who personally represents each member of the group in purchasing the apartment and when selling it - both in the sale of your part and in the sale of the entire apartment at the end of the period.
- The lawyer will be loyal to the purchase money, to open a trust account in your authorization for transfer of the transaction money and with full transparency.
- The lawyer will be faithful to the existence of the shared ownership agreement and will assist in making decisions as part of the shared ownership agreement.
Link to the full agreement: Legal representation agreement
Frequently Asked Questions
- What types of properties are offered on the platform?
The relevant transactions will be properties in high demand areas, in large city centers.
Areas where the supply of assets is limited and will remain limited, and the demand for assets is stable in the foreseeable future, both for the sale of the property and for its rental during the holding period.
We see that the average price of apartments in Tel Aviv has increased by 28% in the last three years (an average of 8.5% per annum).
- Is there a minimum and maximum investment?
The minimum investment amount will be determined for each property separately, starting at 50,000 NIS.
Any amount above 50,000 NIS can be invested in accordance with the availability in the specific property.
- How is the ownership of the property registered?
Your ownership of the property will be direct - you will be registered as an owner of the property in the Israeli Land Registry (Tabu).
In the property tabu registry, there will be a list of all property owners, along with the rate of ownership for each investor. For example, a person who invested 100,000 NIS in a property worth 2,000,000 NIS will be registered in the Land Registry as the owner of 5% of the property.
- What is my collateral for this investment?
You are registered as the direct owner of the property in the Land Registry. Registration of ownership in the Land Registry ensures that your holding in the property is not dependent on Ownerhood's performance.
There is a signed shared ownership agreement between you and the other investors in the property, which regulates the holding and sale mechanism.
There is an external lawyer who represents you with an investment, and is responsible for the shared ownership agreement and its executing on your behalf.
- Is it possible to take a mortgage for the purpose of investing in the property?
The property purchase is in cash without any bank financing.
It is not possible to take out a mortgage for the purpose of investing in the property because the asset can not be mortgaged to the bank, as set in the shared ownership agreement signed by all investors, in order not to limit the selling ability of each of the investors.
You are free to take credit from your bank, without encumbrance of the property. We urge you to consult with us whether the terms of the loan offered to you are worthwhile in relation to the expected return property.
- What are my alternatives for this investment?
Investing in REIT shares - You do not have the ability to choose the investment property, you do not own the real estate property in the Land Registry, and the price of the shares is affected by the general volatility of the capital markets. There is no full correlation of share prices to the housing prices.
Organizing a group of members for the joint purchase of an asset - you will have to invest countless hours in locating and examining assets, using your own professionals for the purpose of examining and identifying a quality asset against the market, building the deal with the partners and preventing conflicts of interest, joint management of the property. This is a complicated task for one holder and certainly for a group of people investing together, who need to make decisions together like when and how to sell the property, how to manage holding exchanges, etc. Also, the costs of professional services for making such a deal on a single property are very high.
A joint investment in real estate projects in Israel and abroad through investment funds and various companies - it is important to understand that these are entrepreneurial projects, and as such they bear a much higher risk compared with investing in an existing property. Any problem that will arise in the project such as difficulties of the contractor, changes in raw material prices, new urban requirements and more can have a material impact on the profits or losses in the project.
investing in real estate abroad - far from sight and far from your ability to understand the investment and feel safe. Often, such investments are made without the investor's ability to know that he is the real owner of the property, without the ability to control the flow funds and the commissions paid, and without any idea how efficient is the management of the asset. Yields in these investments are drastically affected by these components and result from high investment risk. In addition, there is no correlation between the price of the property invested abroad and housing prices in Israel.
- What taxes apply to this investment?
We have examined the subject with a number of experts in the field of real estate taxation in Israel, and we present here only general implications of the transaction. You should examine the tax implications that apply to you in person with your own experts, and the following is not tax advice. We would be happy to contact you for personal tax advice with the experts we contacted.
Property tax - When buying a slice of a property, just like buying a whole property, investors are obliged to pay purchase tax.
A person who does not own a property and purchases a portion that is less than a third of the property will pay a reduced tax according to the tax brackets determined by law, according to his relative share of the property. On the first tax bracket up to the value of property of about 1.6 million NIS is 0%. Next step between 1.6-1.9 million NIS bares a tax rate of 3.5% and the next step between 1.9-4.9 million NIS bares a tax rate of 5%. Above this value the standard rate of 8% will apply.
It is also important to say that buying up to one-third of a property does not "label" the investor as an owner of a property for future property transactions and therefore does not waste the reduced tax on subsequent purchases.
Those who own a property already - will pay purchase tax of 8%. This payment will be deducted from the capital gains calculated for capital gain tax at the sale of the property (or your slice).
Tax on rent income - individuals are exempt from paying tax on rental income up to 5,000 NIS per month. Insofar, as you have no additional income from rent or your aggregate income from rental fees in other assets and in this property shall not exceed that amount, you are exempt. If you do not meet the conditions for exemption, you will have to pay the tax according to the route that suits you personally. We will be able to assist and guide you with the required reporting, but the actual tax liability will be yours because we can not manage the rest of your real estate holdings.
Capital gains tax - When you sell your share of the property or sell the property in its entirety, like any sale of a property, you will be obligated to pay capital gains tax on the capital gain created due to an increase in the value of the property. Today this tax is 25%. As aforesaid, a person who paid purchase tax when purchasing the property may offset this payment from the capital gain. In addition, the increase in the CPI can be offset by the capital gain. For those who took advantage of the exemption on payment of tax in respect of the rental fees - the depreciation component on the apartment will be added to the capital gain.
For those who own only one property there may be specific cases in which a tax exemption can be exempted and they depend on the specific situation of each investor at the time of sale.
- What fees are paid to Ownerhood?
Transaction fee of 2% of the investment - for locating and finding the most attractive deals examined by us and by professionals who work with us, for the pre-acquisition valuations and for the legal support (payment to an outside lawyer) for the purchase and sale stage of the property.
Management fee of 10% of the rental income - for the preparation of the property for rent, the initial rental of the property and the rentals afterwards, for managing the ongoing relationship with the tenants, managing professionals to deal with malfunctions and repairs and for the contact with the authorities and suppliers.
In the sale of the property or its slices - we do not charge commission.
- Can there be additional costs to the property that will need further capital?
We are keeping a dedicated deposit at an amount of two month rent income, to deal with needed repairs. We also purchase insurance to deal with major events. We will always use the deposit first to cover any expenses, and will complete the deposit from the monthly rent income.
However, it is your property and property ownership comes with responsibility. There may be cases when an extra investment is needed (for example if the whole building decides to renovate the common areas of the building). In such cases, if the deposit is not sufficient – an extra investment will be collected from the owners. It would be your decision and your responsibility to invest.
We would help with the group decision making and implementation, but the responsibility would be yours as the owners. Our shared ownership agreement defines the mechanism for making group decisions.
- What happens once you are interested in investing in a property?
We urge you to carefully review all the details of the property as presented on the platform and ask us anything you wish to know, regarding the property or the purchase process.
Once you decide to invest, you will fill out the registration form on the property page, and a signature meeting will be scheduled.
You will be required to make an advance payment of 5,000 NIS. This advance will be deducted from the balance of the investment in the property and will be refunded to you in case the transaction is not completed for any reason that is not dependent on you.
At the signing meeting you will sign the set of agreements and forms for the transaction, and you will also give us a check for the rest of the investment in the property.
The check will be deposited in a dedicated trust account to be opened by the trustee, where the investors are the only beneficiaries in the account and the purpose of the account is for purchasing the asset and managing the asset only. If the purchase transaction is not carried out, the money can only be returned to beneficiaries in the account - you and the other investors, for your protection.
Also at the signing meeting, you give us a check for Ownerhood fees - 2% of the investment.
Your signed agreements and the investment check are kept faithfully by the lawyer who represents you. Once all investors have signed the agreeemnts and all funds are collected, the lawyer will execute the purchase for you, and you will become the proud owner of a property in Israel.
It should be emphasized that from the moment of signing all the transaction documents, there is a tax event in respect of the purchase of the property and you are obligated to complete the transaction, even if the money in respect of the property has not yet been transferred. You can offer your share in the property for sale to another person only after the completion of the transaction and transfer ownership of the property in your name.
If the transaction is not completed for any reason, the investment deposited in the trust account will be returned to you in full.