Welcome to Today’s Practical Planning Tip by ParkBridge Wealth Management. My name is Jonathan Shenkman, and I am the President and Chief Investment Officer of the firm.
I’d like to CONTINUE our video series discussing Financial Considerations Before Making Aliyah.
…And today we will discuss whether to
Buy or rent a home: This is another topic that I discuss with my frum clients on a regular basis. There is an understandable desire to want to own property in the Holy Land. However, this decision should not be at the expense of your financial security. This conversation is also different depending on the stage of life of the individual:
For Early to mid-career professionals: Presumably, if you have a long career and life ahead of you, along with a substantial pile of cash and a healthy income, then buying a home in Israel may make sense. Presumably, owning a home in Israel for several decades will allow it to appreciate modestly in value (hopefully keeping up with inflation) and over time you may be able to sell this asset when you downsize in retirement.
However, I would encourage folks not to rush into purchasing a home. It’s sensible to rent first until you decide where you want to live. On many occasions, families bought into a new development, only to decide after years of delays and additional costs, that they are no longer interested in living in that neighborhood. Home purchases are a big decision. Kal vechomer, a home purchase in a foreign country. Don’t rush things. This is not a race.
Next is for Retirees: The conversation about buying a home in Israel for retirees is different. I often get calls from folks who are wondering if they should liquidate 30-50% of their nest egg to buy a home in Israel. The answer is usually the same: ABSOLUTELY NOT! Wiping out a significant portion of your nest egg to purchase a house in Israel is almost always a terrible idea and can be a financially devastating decision. This is especially true given the very attractive rental market in many Israeli neighborhoods. Yes, your landlord will increase your rent over time. However, if you have a sufficient nest egg then you will be able to easily absorb any price increases. I would encourage folks to speak to their financial advisor to help determine if buying or renting makes sense for you and your family.