Overseas Real Estate: Is It the "Smartest, Sexiest" Investment Today?

Thank you for the valuable advice. Well, there are the affluent and then there is the majority of middle or lower middle class. Buyer beware.

There was an eye-opening documentary here about financial advisors for IRAS and 401(k)s where clients have been royally ripped off. The subtitle was "Who is gaining a profit?"  The segment featured, e.g., one elderly woman who lost $450,000 in retirement savings due to her financial advisor's poor investment schemes. Apparently, she had advised him not to invest in any risky stocks but ignored her desires.  Of course, he cashed in on his commissions (a bit more complicated than I can divulge here).  Need I also mention that one's advisor seems to change more than one receives a quarterly statement? Every time I receive a statement on my IRA, I'm miffed that it reflects a downward spiral.  I'm not very financially savvy so I welcome any sage advice others can deliver.  Did not mean to hijack this thread. Along the vein of your post, it is best to do one's research before investing. I doubt Simon and wife would be lacking in funds to recoup for any losses they incur.

Best regards,
PS

peripatetic_soul wrote:

Of course, he cashed in on his commissions.  Need I also mention that one's advisor seems to change more than one receives a quarterly statement? Every time I receive a statement on my IRA, I'm miffed that it reflects a downward spiral.  I'm not very financially savvy so I welcome any sage advice others can deliver.

Retirees need to be more cautious than young workers, who have time to recoup any losses.  This means avoiding international real estate deals that could become money pits.

Maybe some savant can predict stock market highs and lows, but mortals cannot.

If you are paying fancy commissions for someone to allocate holdings inside your IRA, that may be why your IRA is on a downtrend.  You might be better off longterm with an online broker offering low fees, investing in some baskets of stocks, for example market symbol IWM.  In the short-term, there has been a market sell-off this month, especially affecting issues and baskets that have overseas exposure.

cccmedia in Quito

One of the ideas the world wide real estate investors try to sell is the idea that if you have a rental property in a country in which you do not live, then traveling to that country can be considered business expenses.  The IRS is going to want to know what you did every day you were in country and when you returned to the USA to determine if it was a business trip or if any of the expenses are tax deductible.
One can have a well diversified IRA portfolio with 4 or 5 mutual funds or index funds.  I am 66, have placed the amount I intend to withdraw the first 10 years into a ladder of CD's, the rest, which I don't intend to touch for at least 11 years into stocks and bonds.  In 5 years I will start moving those funds into more secure investments like CD's.  The 2.7% rate I got for a 5 year jumbo CD which matures next year was the best I could do at the time.

I am no expert in finance, but think you could have done better with investing in stocks that pay a 6-8% dividend in some blue ship stocks and ladder them.  Just an observation, not a criticism by any means as we all have different investment strategies. 

6monthsiniraq

6monthsiniraq wrote:

I am no expert in finance, but think you could have done better with investing in stocks that pay a 6-8% dividend in some blue ship stocks and ladder them.  Just an observation, not a criticism by any means as we all have different investment strategies. 

6monthsiniraq

The idea is to be secure for 10 years, never want to start cashing in stocks when the market is in a low cycle, can actually get less for them than what you paid, but CD's guarantee principle plus modest interest.  Still buying stocks, but next year will probably be lower than what I paid this year, now I have 11 years to correct.

The idea is to be secure for 10 years, never want to start cashing in stocks when the market is in a low cycle, can actually get less for them than what you paid, but CD's guarantee principle plus modest interest.  Still buying stocks, but next year will probably be lower than what I paid this year, now I have 11 years to correct.



But the point I was trying to make is that the dividend on blue chip stocks stay pretty even..   Those dividends reinvested are purchasing stocks at a lower price point, thus dollar cost averaging.  It's been a successful technique for me.....I am 56 and have been buying in a bear and bull market and have averaged over 10% a year if I were even to sell stocks in a down market.... Of course I have been investing for 30 plus years, and actually the dividends. Could support me in Ecuador or Thailand!!!  God luck tho....

6monthsiniraq wrote:

The idea is to be secure for 10 years, never want to start cashing in stocks when the market is in a low cycle, can actually get less for them than what you paid, but CD's guarantee principle plus modest interest.  Still buying stocks, but next year will probably be lower than what I paid this year, now I have 11 years to correct.



But the point I was trying to make is that the dividend on blue chip stocks stay pretty even..   Those dividends reinvested are purchasing stocks at a lower price point, thus dollar cost averaging.  It's been a successful technique for me.....I am 56 and have been buying in a bear and bull market and have averaged over 10% a year if I were even to sell stocks in a down market.... Of course I have been investing for 30 plus years, and actually the dividends. Could support me in Ecuador or Thailand!!!  God luck tho....

Did the same thing until I turned 62, then it was time to cash some in for security.  Of course time let's you ride through the ups and downs.  Good luck

Thanks...hopefully this is a small hiccup...but who knows....if I could time the market I would have retired a long long time ago....LOL!!!!  AsI am sure you would have......one thing I have going for me is my military retirement until the government goes belly up, which may sooner rather than later.....

For dividend investing, I like these two ETFs:

Vanguard Dividend Appreciation ETF [VIG]
181 Large Cap U.S. Stocks
2.26% yield
14.75% 5-year return
https://advisors.vanguard.com/VGApp/iip … undId=0920

Vanguard High Dividend Yield ETF [VYM]
435 Large Cap U.S. Stocks
3.29% yield
17.33% 5-year return
https://advisors.vanguard.com/VGApp/iip … undId=0923

mugtech wrote:

One of the ideas the world wide real estate investors try to sell is the idea that if you have a rental property in a country in which you do not live, then traveling to that country can be considered business expenses.  The IRS is going to want to know what you did every day you were in country and when you returned to the USA to determine if it was a business trip or if any of the expenses are tax deductible.

And, your personal use of your vacation home is limited to 14 days.  Per IRS:

Limitation on Vacation Home Rentals  When you use a vacation home as your residence and also rent it to others, you must divide the expenses between rental use and personal use, and you may not deduct the rental portion of the expenses in excess of the rental income.

You are considered to use the property as a residence if your personal use is more than 14 days, or more than 10% of the total days it is rented to others if that figure is greater. For example, if you live in your vacation home for 17 days and rent it 160 days during the year, the property is considered used as a residence and your deductible rental expenses would be limited to the amount of rental income.

mugtech wrote:

One can have a well diversified IRA portfolio with 4 or 5 mutual funds or index funds.  I am 66, have placed the amount I intend to withdraw the first 10 years into a ladder of CD's, the rest, which I don't intend to touch for at least 11 years into stocks and bonds.  In 5 years I will start moving those funds into more secure investments like CD's.  The 2.7% rate I got for a 5 year jumbo CD which matures next year was the best I could do at the time.

I agree totally with your index ETF or mutual fund approach for equities.  Everything is "on sale" now if you happen to have been smart enough (lucky) to have been in cash lately.  My six IRA equity ETFs:

Vanguard S&P 500 [VOO]
Vanguard Growth [VUG]
Vanguard Dividend [VIG]
Vanguard Small Cap [VB]
Vanguard Emerging Markets [VWO]
Vanguard Europe [VGK]

If you are laddering your CDs inside the IRA, even better!

Thanks!!!

6monthsiniraq wrote:

Thanks...hopefully this is a small hiccup...but who knows....if I could time the market I would have retired a long long time ago....LOL!!!!  AsI am sure you would have......one thing I have going for me is my military retirement until the government goes belly up, which may sooner rather than later.....

You're obviously doing very well with the military retirement.  Some of us get to spend in retirement only what we've saved. 

A pension that pays, say, $50,000 a year is the equivalent of an investment account of between $1.0M and $1.25M based on a sustainable 4% to 5% withdrawal rate!

SawMan wrote:

A pension that pays, say, $50,000 a year is the equivalent of an investment account of between $1.0M and $1.25M based on a sustainable 4% to 5% withdrawal rate!

What would be the size of a sustainable annuity (account) in order for a retiree to receive 50K per year ?

cccmedia

cccmedia wrote:

SawMan wrote:

A pension that pays, say, $50,000 a year is the equivalent of an investment account of between $1.0M and $1.25M based on a sustainable 4% to 5% withdrawal rate!

What would be the size of a sustainable annuity (account) in order for a retiree to receive 50K per year ?

cccmedia

Approximately $700,000 for a 65 year old male beginning immediately.
https://investor.vanguard.com/annuity/fixed

SawMan wrote:

cccmedia wrote:

SawMan wrote:

A pension that pays, say, $50,000 a year is the equivalent of an investment account of between $1.0M and $1.25M based on a sustainable 4% to 5% withdrawal rate!

What would be the size of a sustainable annuity (account) in order for a retiree to receive 50K per year ?

cccmedia

Approximately $700,000 for a 65 year old male beginning immediately.
https://investor.vanguard.com/annuity/fixed

And the good news is that if not in a retirement account, then every year some of what you receive is return on investment and not taxable.

SawMan wrote:

cccmedia wrote:

SawMan wrote:

A pension that pays, say, $50,000 a year is the equivalent of an investment account of between $1.0M and $1.25M based on a sustainable 4% to 5% withdrawal rate!

What would be the size of a sustainable annuity (account) in order for a retiree to receive 50K per year ?

cccmedia

Approximately $700,000 for a 65 year old male beginning immediately.
https://investor.vanguard.com/annuity/fixed

This calculator says you'd need $735,000 to produce a lifetime income of $50,000 for life.
https://www.immediateannuities.com/info … tep-1.html

mugtech wrote:

SawMan wrote:

cccmedia wrote:

What would be the size of a sustainable annuity (account) in order for a retiree to receive 50K per year ?

cccmedia

Approximately $700,000 for a 65 year old male beginning immediately.
https://investor.vanguard.com/annuity/fixed

And the good news is that if not in a retirement account, then every year some of what you receive is return on investment and not taxable.

Yep, taxes are a factor.  If in an IRA, then withdrawals are taxed and if not in an IRA the interest is earned when the CDs mature, right?  Or, is it when earned in a CD?

SawMan wrote:

mugtech wrote:

SawMan wrote:

Approximately $700,000 for a 65 year old male beginning immediately.
https://investor.vanguard.com/annuity/fixed

And the good news is that if not in a retirement account, then every year some of what you receive is return on investment and not taxable.

Yep, taxes are a factor.  If in an IRA, then withdrawals are taxed and if not in an IRA the interest is earned when the CDs mature, right?  Or, is it when earned in a CD?

If a year or less, then the CD interest is reported at maturity, if more than a year term, then each year the amount of accrued interest is reported and taxed.

SawMan wrote:

If in an IRA, then withdrawals are taxed...

Traditional IRA's can be subject to withdrawals-related taxes.

For qualified withdrawals, Roth IRA's are not.

That is why I converted my IRA to a Roth years ago.

For some, the trick may be to convert during a propitious window of time, tax-wise.

Consult an accountant if in doubt.

cccmedia in Quito

There is no "one" real estate investment strategy or "one" likely return rate. Each should be tailor made to the specific client. That is why working with a real estate investment consultant (I am one), rather than a "run of the mill" sales agent is a smart option. For the record, I seldom come to the defense of the reporting entity linked to the article, but too easy to damn too broadly. A smart global real estate investment portfolio can give plenty of solid returns, provide tax benefits and serve as a great vacation get-away- Finding good property management is critical, ***prior*** to purchasing. Good firms exist. Less than professional firms exist. Ultimately, as an investor, you need to do serious homework, before you are parted with your money. I said....serious homework. Not listening to advice from the nearest bar fly, or "great guy/gal" you met at last night's fabulous parties, where the margaritas flowed freely. Serious homework. Interview...interview...interview.

HGQ2112 wrote:

Finding good property management is critical, ***prior*** to purchasing. Good firms exist. Less than professional firms exist. Ultimately, as an investor, you need to do serious homework, before you are parted with your money....

Ideally, find your property management before even looking at property.  What good is a deal if you'd be exposed to the risks of property ownership and can't find in-town protection!

I bought a putative investment property in 2005 in Quito .. and by the time the purchase closed, the property manager/adviser I had worked with on the purchase had left the property-management business.

I recommend against overseas property ownership for investment purposes unless it is a small part of your overall investments.  Too much downside exposure otherwise.

cccmedia in Quito