Purchasing agricultural land is an excellent investment for those who are interested in investing their money and do not have a lot of capital. Even if you do not have all the money needed to buy land for purchase, you can find a source of financing for this. What sources of funding are there? Can investing in agricultural land be more profitable than purchasing residential land? What common mistakes should be avoided before purchasing land? Everything you need to know before buying land for sale in this article.

Investment in agricultural land – a significantly cheaper investment channel with a high return

This is an investment channel in the field of real estate that does not require huge sums of money from you in order to earn a good return. Investing in land, if done intelligently, can lead to very high financial gains. Currently, the prices of apartments in Israel are quite high, so that most people are not able to reach such large sums of money. On the other hand, it is possible to purchase land for sale at attractive prices, with an average of NIS 50,000 to NIS 200,000.

Land for sale – the types of land available and the differences between them

Land for construction

This is land intended for the construction of residential or commercial areas. Investing in residential land is a more expensive investment channel because there is naturally a higher demand for residential space.

Agricultural land

This is land used for agricultural purposes. The price of agricultural land is significantly lower than land intended for construction. Agricultural land for sale is an excellent option for investment. This is because it is possible to invest a relatively small amount of money, with the potential for very high profits. However, agricultural land for sale may in some cases be not profitable at all if under certain circumstances.

Thawed agricultural land

Thawed land is agricultural land that is being converted for construction. This process, in fact, causes a spike in the price of agricultural land. This is because land for construction is significantly higher than agricultural land. So it can be said that you actually bought land for construction, at the price of agricultural land. However, agricultural land for sale will not necessarily later become land designated for construction. However, there is potential for this due to the construction boom in recent years.

What is important to know before buying agricultural land?

Purchasing agricultural land for sale in many cases can yield a nice and high return. However, there are some things that are important to consider before purchasing agricultural land. Sometimes, the bureaucracy can be too long and too cumbersome. Thus, in fact, it may take years for the agricultural land you purchased to become land intended for construction for residential and commercial areas.

Private Agricultural Land

Before buying agricultural land, it is necessary to make sure that it is privately owned. This is because if the land is owned by the Israel Lands Administration, a lease of the land may be possible. It is necessary to check whether there is a clause according to which the state can make use of the land or return it to the state, either under certain conditions or by a decision of the state. For this reason, it is highly advisable to avoid agricultural land

Checking the Soil Location

A significant parameter that affects the price, the quality of the return and the quality of the investment is the location. In addition, another factor that affects the value of agricultural land is the chance and duration of defrosting the land later on to land for construction. It is recommended to buy agricultural land in the central region due to the proximity to many services and workplaces. In addition, agricultural land for sale that is located near a road or in a place with high accessibility may have a higher value.

Choosing a Reliable Real Estate Company

Don’t be tempted by every offer you receive from the various real estate companies. Before that, carefully check the company’s credibility and reputation. There have been many cases in which companies have gone bankrupt, which has caused all of the customers’ investment to go to waste. Therefore, ask yourself what is the company’s experience in the field? Are there any recommendations for it? Has the company proven itself in the past? Is she well versed in the process? And so on. It is also important to check that the agricultural lands that the real estate company will offer you are indeed registered in the Land Registry and that these are only private lands.

Purchase Planning

Although this step is not up to you exclusively, you should make sure that the whole process is done properly. Carefully check the planning of the process with the professional parties from whom you are purchasing the land. In order for the land planning to be successful, it is necessary to plan in advance how the land will be able to be thawed later and take into account various factors related to budget, politics, geographical location, and more. In addition, there are other parameters that must be taken into account during the process: budget, infrastructure, space, schedule, and more. The more information and detail there is about the process, the better it will be for the customer.

Things to watch out for before buying agricultural land for sale

Here are some things to pay attention to in order to avoid critical mistakes that could ruin your entire deal:

• It is necessary to make sure that the land is indeed privately owned, and not owned by the Israel Land Administration.

• It is extremely critical to check that the land is not located in areas prone to disaster. It is highly recommended to avoid agricultural land that is located near illegal Palestinian communities, which are not located among security facilities, ancient and historical sites, and the like.

Raise these issues with the real estate agent and demand that these parameters be carefully checked before purchasing the land.

Finding Sources of Financing for Investment in Agricultural Land

Unfortunately, there are many people who cannot afford to purchase land for investment. But the good news is that there are many financing options for investing in land. It is possible to get financing for an investment even with relatively low equity. This is in contrast to investing in real estate, which will require you to pay at least hundreds of thousands of shekels, with a commitment for decades to come. On average, land for sale costs about NIS 50,000 to NIS 200,000, depending on the type of land and its location.

Financing the land through a bank loan

This is an excellent option for those who are interested in purchasing land for sale. The reason for this is that in some cases, the loan may even cover the entire price of the land. And even if this is not the case, with the help of relatively low equity, it is possible to obtain most of the amount needed to buy land for sale.

Obtaining a mortgage for the purpose of purchasing land

There is also the possibility of obtaining a mortgage for the purchase of land. It is possible to obtain a mortgage from the bank under certain conditions. In order to be eligible for financing from the bank, you must have an initial sum of money of at least 40% of the value of the land you wish to purchase. Thus, in practice, you will receive 60% financing from the bank.

In addition, various permits are required in order to purchase land for sale. If the purchase is from a private person, it is necessary to make sure that the land is registered in his name in the Land Registry and to bring a certificate attesting to this. The bank will send an appraiser on its behalf to measure the value of the land based on various data (location, designation of the land, etc.). After the bank examines these data, you will receive a possible financing offer, which may vary according to the various parameters.

A significant advantage of this option is that there is no need to bring building permits and this does not involve a lot of bureaucracy. However, the bank will want to know whether the customer will be interested in building on the land in the future. If so, you will need to present your equity and a possible cost estimate for the construction. The bank wants to make sure that you are indeed able to meet two mortgages at the same time and repay them. In any case, it is recommended to consult with a mortgage consultant.

Receiving financing from a financing company

This is a recommended option for those who need to receive funding immediately. You should use this option if there is competition for the desired land, and you do not have the money for it at that moment. From the moment you receive the funding, you must return it at the predetermined time. Or, alternatively, the financing can be turned into an equity loan.

Reverse Mortgage – What is it?

This is a loan that allows you to receive money from the value of the apartment so that the money itself can be used. Many people choose to take out a reverse mortgage for one reason or another, such as: for the children’s wedding, buying a property for a child or abroad, etc. A reverse mortgage is excellent for those who own an apartment and want to purchase an additional property. In addition, it is of course possible to purchase land for sale through a reverse mortgage.

However, there are certain conditions that must be met in order to be eligible for a reverse mortgage: the borrower must be over the age of 55, the value of the real estate must be over NIS 1 million, and the property must be fully owned. In addition, there are a number of other conditions that must be met in order to receive a reverse mortgage.

Balloon Loan – What is it?

This is a regular loan, but for a short term and in very large amounts. This type of loan is intended for those who own a property that they are interested in selling. Well, then what is the reason why a balloon loan might be useful for some people? Well, a balloon loan is especially useful for those who are interested in buying another apartment, but do not have enough time to sell their current apartment.

In other words, the apartment owner can receive a very large loan for a relatively short term. This is a loan whose amount is usually over NIS 1 million, and the borrower must repay it in a relatively short time, 2-3 years. During this time, the landlord can look for another tenant – and at the same time live in the new apartment he bought.

Relatively high interest rate

However, it should be taken into account that the interest rate for this type of loan is relatively high. So why should you take a balloon loan even though the interest rate is quite high? Well, real estate prices are soaring, so it’s a good idea to buy a new property as soon as possible, before its value rises. In addition, there is a lot of competition for any property, and someone else may buy it before the person who is interested in the property.

Also, this loan is not limited to assets – a balloon loan can also be used for the purpose of buying land for sale, or for any other relevant purpose.

A table detailing the advantages and disadvantages of the various funding sources

of Balloon The of a A

Advantages and disadvantages	financing land through a bank loan	Obtaining a mortgage for the purchase of land	Reverse mortgage	loan
advantages	of the value of the loan may cover most of the value of the land, it is relatively easy to get a bank or non-bank loan	Spread out of long-term payments – a convenient option that does not burden the buyer	allows you to mortgage part of the value of the property in order to receive money for immediate use, in which it is possible to buy an additional property	you can receive a very large amount of money for immediate use.
Disadvantages	relatively high monthly repayment compared to a mortgage	very long-term commitment	for most people This option is irrelevant, only for those aged 55+ who own an apartment with	a relatively high interest rate and the loan must be repaid within 2-3 years

Meni Group – We will be happy to assist you in purchasing land and finding sources of financing

Mani Group – Marketing, Entrepreneurship, Finance has extensive experience in finding sources of financing. Our company provides full advice on obtaining a mortgage, reverse mortgage, balloon loan and all types of financing sources available. Our process includes full accompaniment from A to Z, and we will help you find the most suitable source of funding for you under the best conditions. More information can be found on the Meni Group website.