Small Business Resource: IRAs in Foreign Real Estate- Potential Hazards

« Five ways to guarantee your business leadership success | Main | Why the Audiobook market is about to explode »

November 26, 2006

IRAs in Foreign Real Estate- Potential Hazards

By Joshua Geary

We’re saying this tongue-in-cheek really, but you know how we’ve touted the many benefits of buying real estate overseas with your self directed IRAs and LLCs which everyone seems to be doing. Remember how 20 years ago Americans were on the prowl for some Costa Rica land they could call their own? Today, it’s going to be twice as difficult because Costa Rica real estate – or a good part of it – is already in the hands of foreign investors.

The other day we also mentioned about Donald Trump’s Ocean Tower in Panama where pre-construction values start at $200K for a condo unit in the 65- story skyscraper. If construction goes like clockwork, think how wealthy the initial buyers will be 10 years down the road.

Now, looking at the other side of the coin, it’s fine and dandy to encourage you about investing globally, but when it comes to buying property overseas, it would only be fair if we also spoke of the potential hazards. Two sides of the coin – Jack and Jill – yin and yang, remember?

Gerri Willis of CNN Money wrote an excellent article about investing in overseas real estate. She said there are 5 things to watch out for.

1. Look at the larger picture

2. Get help

3. Pay cash (if called for)

4. Check that title

5. Grease the wheels

We’ll explain the first two in this blog, and then the final three in the next blog. But you can read Ms Willis’ article here if you want to:

http://money.cnn.com/2006/03/23/real_estate/tips/willis_tips/index.htm?postversion=2006032311

Looking at the larger picture means that before you plunk down your retirement savings on a piece of property, study the country on which that piece of property stands. If Costa Rica has become too crowded, you might be attracted by Switzerland’s neutral global position but Ms. Willis said that foreign ownership in that country is restricted. Going to the far end of the globe, she says Vietnam is a great Asian country but is still in the developmental stage.

Get help. If you’re thinking of buying property in Malaysia, Ms. Willis says you’re welcome to, but when you decide to sell it, your money has to stay in a Malaysian bank account. So you’ll need some expertise in this issue.

Posted by David at November 26, 2006 1:01 AM