Dennis J. Easters explains three ways to fund Costa Rica real estate without touching retirement savings: self-directed IRAs (you can't use the property yourself), 401(k) loans (you repay yourself), and securities-backed lending (borrow 50-60% of your brokerage account at low rates). Each has IRS rules and penalties to watch.
Chapters
Good morning. Today we're going to be discussing IRAs, 401s, and security-backed lending, 3 of the alternative ways that you can use your monies, your investments, to purchase property in Costa Rica. The first option is your IRA. Many people and most people's brokerages are unaware that they can actually use their IRA to purchase property abroad. You need to have something that's called a self-directed or a checkbook IRA in order to do this. One of the big factors that you need to keep in mind if you're going to use an IRA to purchase real estate abroad is that you cannot personally use the property. This is a great alternative for people who want to have an investment property or a rental property overseas. The IRA is strictly regulated by the IRS, who sets out guidelines of what you can and cannot do with your IRA funds. So make sure you're aware of that, but yes, you can use your IRA to purchase real estate abroad. The second option is using your 401. Some people have private 401s, other people have corporate 401s. Every 401 is set up differently and you need to investigate, but oftentimes you can borrow against your 401 to purchase property abroad. This is a great way to leverage money that you already have saved, and essentially you will be paying yourself back. Third way that you can also purchase property abroad is called securities-backed lending. Say you have a brokerage account, you can often borrow 50 to 60% of the value of that brokerage account at generally lower rates than if you were to take out a loan or a mortgage. So oftentimes you can borrow at 1 to 2%, and there are many factors that will determine the rates and how much you can borrow, such as credit score and the actual size of your brokerage account. But it's a great way that you can leverage money and funds you already have without taking a hit or penalty, and you will stay in the market, and essentially you'll just be paying yourself back. So if you are pre-retirement or retirement and there are going to be some penalties if you pull money out of your accounts early, you may want to consider these 3 options. Just keep in mind that you want to be aware of the rules and regulations behind each one before you pull the trigger, but these are great tools to use for purchasing property overseas. As with a few of our other videos, I'm going to put a link to an article that I've written about the subject that is a little bit more in depth and will give you a great jumping-off point to do some investigating on your own. We hope this information has been useful and we look forward to working with you very soon. Pura vida from Atenas. Have a great day.
