Monday, April 25, 2011
Dear Reader,
In your home country, if you want to finance a property purchase you will likely go talk to your bank. Go overseas (with the exception of developed markets like Europe and Australia) and bank finance is trickier to get, with a lot more paperwork to fill out…and if you manage to get bank finance, it’s often punitively expensive.
There’s a way to finance your property purchase in paradise (if you are a US resident) ...and you may not even know about it.
I’m talking about using your IRA to buy international real estate. The IRS is flexible and accommodating when it comes to doing this. You can do this as long as your IRA is “self-directed” and you don’t work with a custodian who imposes his own investment restrictions.
Many Americans I know have already done this. You can own pretty much any kind of real estate in your IRA or other retirement account. Everything from raw land to single-family homes to condos to office buildings…once the investment complies with some straightforward rules that outline what you can and cannot do. A simple rule of thumb is that your retirement plan is designed to benefit you at retirement and not beforehand. That means that you can invest in any type of real estate, as long as it is an investment and not for personal use before your retirement.
You can buy your dream retirement home using IRA funds today. Once you retire, you can take possession of the property…in effect taking it as a distribution of your plan. Between now and retirement, you can generate income for your plan by renting out the property. You can even collect a “reasonable fee” to manage the rental of your property or appoint an outside agency to manage this on your behalf.
You can buy and flip properties within your IRA and you can even use your IRA to buy an option on a property or piece of land.
International real estate continues to offer both diversification and growth opportunities. Diversify your investment portfolio outside the U.S. economy and the dollar, into growth markets and appreciating currencies. Real estate in Brazil, for example, continues to rapidly appreciate, while the real (Brazil’s currency) has strengthened in value against the U.S. dollar.
So, not only can you finance your dream home using IRA funds…you can put your retirement planning on a more diversified footing.
Ronan McMahon
Editor’s Note: At the International Real Estate Investment Forum in Toronto this June 9th-11th, Jeff Nabers, CEO of Nabers Group, will host a workshop on self-directed IRAs and solo 401K investing, and how you can use those funds to purchase property. Plus, we’ll have special deals and discounts on a range of overseas properties…everything from chic condos in Mexico to luscious lots in Costa Rica. But you’ll have to be in the room to take advantage of these offers. Click here to find out more about the event.
Posted Under:
Want More?
Sign up here for your free Pathfinder Alert e-letter, and we’ll send you our $50,000 Report...showcasing seven real estate opportunities for $50,000.
