One year ago, we bought a gorgeous dream home in Herradura, Costa Rica near the nicest marina in the country, Los Suenos. It sits at the base of a mountain jungle and walking distance to Vista Los Suenos canopy tour. I still pinch myself wondering if we did the right thing. The whole process has been a roller coaster of ups, downs and lessons learned. I have lost sleep, get heart burn because I have emptied my bank account and second guess myself all the time. But you know what, at the end of this we will have a bad ass house where we can one day live a second chapter of life…in paradise.
I’m no expert in international investment. I learn something new all the time. My offering to you are some gleanings, insight and musings to consider. If living internationally is your dream, then read on for 5 tips to buying international real estate.
Tip #1 : Select a Place That is American Friendly//Open to Foreign Nationals.
This seems like an obvious point, however not all countries are really open to foreign nationals. All countries love tourism and how it benefits the local economy, but what happens when shit gets real? What do you do if there is a dispute? How much can you trust the law enforcement if something were to go down? What is the country’s relationship with expatriates and extradition treaty with the U.S.?
There are so many things that I take for granted and don’t give a second thought in my homeland. However, all goes out the window when you are a visitor in another country. Culture, religion and socio-economic factors all come into clear view once you spend time in another country. But you have to go beyond scratching the surface. That is why I recommend that you interview expats when visiting to get a deeper perspective before making a decision. Ask tough questions and you’ll get real answers.
Tip #2: Always Consider Your Safety.
Terrorism, kidnapping, and human trafficking are all very REAL issues. I am not trying to scare you, but things are much different overseas. As an American, you are a moving target to people who want to take advantage of you.
When it comes to your person and property you are always at risk at being compromised. So my advise is to keep a low profile: carry very little cash, diversify secret stashes and never, ever flaunt your wealth with jewelry, electronics, and brand name clothing labels. Be sure to make your whereabouts known and be keenly aware of your surroundings. Choose an area that you feel comfortable with. Consider a gated community, secure access building or monitored patrol/security system. And the best advise? Make friends with locals who can be an extra set of eyes and your watchdogs.
Tip #3: A New World Order of Exchange Rates, Economic/Political Impacts and Acts of God.
I didn’t think I lived in a bubble until I bought international property, then my eyes opened. Now I pay attention to the international news, paying close attention to Zikka, who runs Costa Rica, and the neighboring countries around it, what new policies are in play, mudslides, hurricanes, and all acts of god.
What happens in that country’s economy good, bad, indifferent now affects you and your investment. It’s a roll of the dice. You have to be willing to accept the fact you have no control and close to zero ability to make an impact as a non-citizen. And even if the U.S. dollar is holding strong, that doesn’t mean the value of your investment has held. It is all dependent on the local economic climate of that country. So when it comes time to sell, you may come out a loser and you will have to be prepared for that outcome…and accept it.
Tip #4: Interview Multiple Real Estate Agents.
This was something that we did and had huge benefit from. Very quickly we could see who really listened to our needs, who took the time to show us realistic deals, and most importantly who we felt, from our gut, was a person we liked and trusted.
Fortunately, we lucked out and found an agent that turned into a real ally, who looked out for us even after the deal was closed, and one I consider a friend to this day.
Tip #5: Hire a Tax Accountant Who Specializes in International Affairs.
Had we gone to a tax accountant first we probably would have saved a lot more money. There are certain forms to file that could cost you $10,000 each year that you don’t submit. And in hindsight, had I gone to an accountant first, I would have purchased a different deal by knowing what type of asset organization I was looking for. The right tax accountant can have the right insight and money saving tips to help guide you through the process to help you protect yourself. So do your research first and find someone before taking the leap.
Here’s a link to the IRS website with tax tips to reporting foreign income: https://www.irs.gov/uac/seven-tax-tips-about-reporting-foreign-income