by Daniel Ortega
Director of Business Development
Vantage Self-Directed IRA’s
At Vantage, we’ve spent the better part of 18 years educating Americans about the favorable benefits of a Self-Directed IRA. Real Estate has been one of the most sought-after asset classes in the private market space, but what investors aren’t too familiar with is their ability to invest their IRA savings directly into investment properties outside of the U.S. Yes, that’s right, you can not only diversify your IRA into profitable domestic real estate deals with a Vantage Self-Directed IRA, but you can also grow your retirement through expanding into the global real estate market.
Last month I had the pleasure of speaking with a prominent international real estate investor who has served investors from Australia, Argentina, and Spain and now supports investors interested in buying rental properties in Costa Rica. Here are some highlights from our discussion.
Daniel: How hard is it to buy investment property outside of the United States, particularly, in Costa Rica?
International Investor: Not as difficult as most people would think. In Costa Rica, the majority if not all the purchase contracts are offered in English, which eliminates the language barrier, which is one of the most common concerns investors initially have. You can have funds wired to Costa Rica without heavy U.S. regulations and funds are available usually within 72 hours. If you’re looking for a beachfront investment property, you can find great properties under $350K. If you don’t mind being a mile away from the beach, you can find deals for under $250K! For IRA investors, being able to find beachfront vacation rentals at that price point makes it very attractive. You aren’t going to find that type of offer in the U.S.
Daniel: What are the pros and cons of purchasing real estate internationally?
International Investor: Well, the cons are obvious, unless you plan on flying to Costa Rica to check on your rental property frequently, you will need to hire a credible property manager, which can cut into your net profit, but property management services in Costa Rica are very affordable. Another downside would be that if you purchase this property within your Self-Directed IRA, you will be unable to personally use the property which can be a bummer. We have to remind our IRA investors that IRS rules don’t allow them to use their vacation rentals at all. IRA-owned rentals must be for investment purposes only, regardless of the country you are purchasing in. However, a pro is that if you use your Self-Directed IRA to purchase an investment property, most properties here rent from $100-$235 per night and can generate about $60K-$90K in tax-deferred revenue, net of the minimal local taxes in Costa Rica.
Daniel: If you had any advice for anyone interested in exploring international real estate, what would it be?
International Investor: I can only speak for how I support my investors and I would always encourage them to take a visit to Costa Rica and experience all it has to offer. Visit some properties, both in the day and night, be a tourist yourself, and see how you can make the investment most profitable. Most people are initially apprehensive about exploring investing in Costa Rica because it is a third-world country, but the reality is that it certainly offers a much higher experience. It’s a country rich in development and tourism which could be an investment that is very profitable for the RIGHT investor. As with any investment, you have to do your homework, but doing your homework in a beautiful destination like Costa Rica is extremely enjoyable.
At Vantage, we have supported many of our clients who have had an interest in expanding their IRA investments internationally. We will continue to be an advocate of investing your IRA by design, not default, and directing your retirement money into assets you believe will help you accomplish your financial goals.
To learn more, we encourage you to contact our office to not only inquire about how you can invest your IRA beyond the stock market but also beyond the U.S. real estate market.