Christmas Donations For Fatima

Thank You, Dear Readers, For Your Help This Christmastime

Dec. 19, 2010, Casco Viejo, Panama: Live and Invest Overseas readers and staff have contributed this Christmas 2010 to the efforts of Panama’s Fatima Parish in Casco Viejo.

And Lief Simon On: How To Buy Foreign Real Estate Using Your IRA Or 401k...

Dear Overseas Opportunity Letter Reader,

Earlier this month, we invited readers in Panama City, either living here or just passing through, to stop by our Live and Invest Overseas office for a little holiday cheer. And we invited them further, if they were interested, to bring along a donation for the Fatima Parish.

Fatima is a small Catholic parish operating in one of the poorest neighborhoods of Panama City and working hard to do everything it can for its parishioners, including operating a small orphanage, a daycare center, before- and after-school care for working moms, and job training for teenagers. Plus, the parish serves a few hundred meals a day to locals...offers a dental clinic a few days a month...and cares for the elderly.

Fatima operates with little state support and depends almost entirely on private contributions.

Not only those readers who stopped by for a glass of eggnog that Friday evening earlier this month, but our Live and Invest Overseas staff, as well, brought donations of toys, clothing, and toiletries for our collection boxes. Everything from coloring books and Barbie dolls to diapers and shampoo. Some came with cash presents, too.

This week, we delivered all the loot that had been collected beneath our little Christmas tree to Father Javier, the guy behind all the good work being done at Fatima. Father Javier sends a big thank you to all Live and Invest Overseas readers who contributed to our efforts this Christmastime.

We've bigger plans for helping out at Fatima Parish in Casco Viejo in 2011. Watch this space for opportunities to participate in our efforts, both to raise money and to volunteer your time. There's much to be done at Fatima, and we're hoping to be able to help with a little of the load.

Meantime, our warmest wishes as we head into this Christmas week. Some of our far-flung Live and Invest Overseas contributors have filed reports of how the folks celebrate the season in their part of the world, and we'll be sharing these Tales of Christmas from Around the World with you throughout the week, from Nicaragua to London...from Argentina to Vietnam...

Finally, as we prepare to depart for chillier climes to visit family back in the States this Christmastime, I have to admit it: We're wishing for snow...

Kathleen Peddicord

P.S. What else this week?

• Medellin, Colombia, is the featured destination for the current issue of the Overseas Retirement Letter (due in subscribers' mailboxes later this week). The report is written by yours truly.

Preparing it, I couldn't help but compare that city to Panama City, my current home base and a long-standing top retire-overseas choice.

In many ways, these two places are the yin and the yang of each other...

• I've given you my picks for the best places in the world to move on, to start over, to reinvent yourself, to launch a new life, and to live better, perhaps for less, in the New Year...

To remind you, my recommendations for the World's Top Retirement Havens for 2011 are here.

Now...what in the world are you supposed to do with this list?...

• Your most important ally when buying, selling, or renting real estate in any developing market is your attorney. First thing, before you do anything else, you need to find a local one you can trust who speaks real English, who has experience working with foreigners...

And, who, critically, works for you...not for the seller, not for the property developer, but for you. Sharing doesn't count. If you're sharing an attorney with the developer, whose interests come first in his mind when an issue arises?
"Do you mean I need an attorney even to review a rental contract?" asked an attendee at our conference earlier this month.

Yes, I mean you should engage an attorney even to review a rental contract.

In any emerging, unregulated market (like Panama, Nicaragua, Belize, Ecuador, Colombia, etc.), you can't take anything for granted. You must assume that nothing will be as you expect or as you're accustomed to back home. Not even a simple rental contract. For, in unregulated markets like these, nothing is standard.

Furthermore, in some countries, any legal document, to be legal, must be in the local language (Spanish, for example), meaning that, unless you read Spanish at a high level, you aren't going to be able to identify the surprises on your own...

• With Christmas Day approaching, we launch today our annual"Christmas Around The World" coverage this week with a report from Ireland Correspondent Lynn Mulvihill of one of this country's quirkiest festive traditions, what the Irish refer to as the "Christmas Day swim"...

Also This Week...from resident global real estate investing expert Lief Simon:

Most people understand that buying real estate overseas is a smart part of any asset-protection and diversification plan right now. Unfortunately, though, many people have the majority of their retirement funds and net worth tied up in some kind of retirement account, a 401k or an IRA, for example. And most custodians of these accounts don't allow for "non-traditional" types of investments like foreign real estate.

The important thing to understand is that it's not that you can't use your IRA funds to invest in real estate. It can be, though, that your custodian doesn't want you to...either because he doesn't want (or understand how) to deal with the required paperwork or, more often, because he makes more money if you invest in one of his preferred investment products.

To buy real estate--foreign or local--with your retirement funds, you have to set up what's called a "self-directed IRA" or "self-directed 401k." Entrust is probably the biggest and best known of the custodians for self-directed accounts, but they aren't the only one. Equity Trust and Lincoln Trust are two other options, but a search online for "self-directed IRA custodian" will get you a longer list of options.

When choosing a custodian for a self-directed IRA or 401k, you want to make sure that the program will allow whatever type of non-traditional investments you plan on making, including foreign real estate.

Maybe the best way to simplify how you invest your IRA/401k funds is to establish what a friend has dubbed a "checkbook" IRA.

To do this, you set up an account with a self-directed IRA custodian. Then you create a corporation, in which your IRA invests all its funds. Then you, as the president/manager of that corporation, invest the funds of your IRA as you like.

This structure allows you to eliminate the paperwork otherwise required each time you invest in something "alternative." You simply write a check from the corporate bank account to make the buy.

This structure is the most straightforward I know for using retirement funds to invest in real estate overseas. I've seen many people get far into the buying process and then hit a wall with their planned purchase when it comes time to title the property in the name of their IRA account, as is required for IRA investments. Most countries' legal systems don't know what an IRA account is, and they have no idea or no way to title a property in the name of such an account. They do, however, know what a corporation is, and titling a property in the name of a corporation isn't generally an issue anywhere.

One thing to remember when investing with a self-directed IRA is the self-dealing rules. For example, and broadly speaking, you can't have your IRA buy real estate from you directly. And you can't have your IRA buy a property and rent it out to your business. You'll want to take a look at the list of self-dealing rules to make sure you understand them. Note that there are many exceptions to the rules that allow you to do many things initially disallowed.

Also note that you can't use your IRA self-directed funds to buy real estate for personal use; the property must be an investment. You can't buy a vacation home with IRA funds, for example, and then spend three months a year using it..

However, you could buy a piece of real estate with the plan to rent it out until you retire. Then, once you do retire, you could take the property as a distribution from your IRA and move in...and live in it.

This concept works well for funds from a Roth IRA. You can let the rental income grow in the IRA tax-free, then, when you take the distribution of the property at retirement, that distribution is also tax-free.