I have no money to invest in real estate !!!! That's what my student told me. what about…
I have no money to invest in real estate!!!!
That's what my student told me.
What about the imprisoned capital?
He looked at me like you were Chang Mao Li a Chinese real estate developer from Shanghai !!!! ????
What is locked up capital???
Any property owner can extract capital from his property and buy another property with this capital.
The capital in which he bought the property is called in the banking language imprisoned capital.
For example
A couple that owns an apartment worth NIS 2 million can extract a locked-up capital of NIS XNUMX million
And buy a property for a million shekels.
And if this couple has a mortgage?
If the mortgage is less than 75% of the value of the property then it is possible to extract imprisoned capital up to 75% of the value of the property.
If this couple has another apartment in addition to the property where they live, is it also possible to extract imprisoned capital from the other property?
Yes of course .
But up to 50% of the value of the property.
*** Is it possible to buy a property abroad with capital imprisoned?
Yes, absolutely .
***When you study real estate, everything is easier!
Of course, it is mandatory to check and compare rates and mortgage routes.
**The Bottom Line**
Release the capital imprisoned in your property
And let him work for you
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This captive capital rescue is laundering words for additional mortgages.
It's nice but a mortgagee needs to repay.
If the investment does not yield at least the amount of the mortgage repayments - the extraction of the imprisoned capital becomes a cash flow burden on a regular basis
Sounds easy and promising, but the reality is very different especially those who invest overseas! And especially for inexperienced investors.
Unfortunately we constantly come across ones where Excel has shown excellent results but reality has hit them hard!
1. In the banking language it is not called imprisoned capital.
2. You will not be able to take out a mortgage for any purpose with 75% financing, this financing percentage is reserved only if you want to purchase a single apartment in Israel, in order to "extract capital" from the apartment you can reach 50% financing. There was a temporary order that expired during the corona time that could have reached 70% and that too only for the purpose of repaying other debts.
It is worth noting that an all-purpose mortgage will have a significantly higher interest rate than a mortgage for the purchase of an apartment in Israel.
4. Taking a mortgage is only a matter of decision, you have to comply with the banks' regulation regarding repayment capacity, when it comes to check our repayment capacity, the bank will not consider the property we document to purchase abroad. In general, a bank will not approve a monthly repayment of more than 1/3 of our net income.
5. Such a mortgage has additional costs in the form of insurance, at older ages this is a significant expense.
GN: Performs exactly what you wrote.
Shabbat Shalom
The extraction of this imprisoned capital has another name - leverage. And when you leverage too much you lose the panties.