I'm working on a project in Coast Rica.
It's a hybrid of REI, Vacation Rental, Travel and Event Management.
With me being based in the United States (Minneapolis, MN) I'm interested in learning of some of the issues that might arise.
The first thing I would look at are property rights and whether you can legally own property in Costa Rica. Here is something from a quick Google search:
I have had numerous clients who were swindled out of hundreds of thousands of dollars by investing overseas. These problems ranged greatly but here are a couple I have dealt with:
1. Paying but never acquiring title - the person who sold it didn't have ownership and was communicating property laws which weren't correct.
2. The mayor in the foreign country went in and changed the title of the property to their name.
3. Couple of clients have received calls from people saying that someone else is trying to sell their property.
4. Someone selling a property was met by several people with ARs and briefcases full of cash to purchase the property.
Your post doesn't seem clear but it also confuses your tax reporting. You may have to file form 5471, you may now have FBAR requirements, and Costa Rica may require you to pay taxes there in addition to US taxes.
In any instance I would get your ducks in a row before starting, foreign investments can be rewarding but I have only seen VERY expensive problems.
Agree with @John Woodrich . For the most part most of my clients with foreign investment property have gotten out as it is not worth the hassle. The ones that still do have a house for family members living outside the country or the like. It's definitely doable but make sure you have strong local connections before throwing dollars into a foreign venture. Good luck!
@Bradley Gudim I'm headed down to Costa Rica this weekend with my oldest daughter. I lived there for 2 years about 15 years ago.
What kind of deal are you putting together and where is it located?
@Shiloh Lundahl It's a hybrid of REI, Vacation Rental, Travel and Event Management near the Osa Peninsula.
This is an interesting thread because I was just approached by a group called The Costa Rica Team looking for investors to develop a complex called Cielo Vista. They claim that they will pay 8% per annum for the first 2 years, then make a balloon payment of the initial investment. After balloon payment, they will pay quarterly dividends averaging 20% per annum (up to $100K for a $100K investment, or for life with $300K+). I'm not even sure I know how to go about doing the due diligence on this deal because I don't have any connections in CR. Would love to hear your thoughts, particularly from anybody with REI experience in CR.
@Sam Sharata most investments like you are talking about in the US are generally open to accredited investors only but in a foreign country you likely have different or no rules. A common denominator in people who get screwed in overseas investing is that they send money to someone they don't know who makes big promises. My father told me if it was too good to be true it likely was. The thought that they will make interest payments, pay you back, and keep paying you large dividends seems too good to be true.... Just like my client who started paying money to put up a fence and start planting fruit trees in Jamaica because of a "rule" which says you can acquire land though a period of farming.... Turns out Jamaica wasn't giving any land away after all!!!
@Sam Sharata this guy is the founder of the Costa Rica Team http://www.ripoffreport.com/reports/the-costa-rica...
Don't know if the story is true but surely this is something to be concerned about... Sure looking like a scam to me.
@Sam Sharata My contact is living here in Minneapolis, and I've known him for about 6 years. He has had the land development in CR for I believe 12-13 years. The ROI fro this project is coming from not only the Real Estate, but more so from the events and activities we plan and promote on the property and community.
I agree with @John Woodrich investing in a foreign country is challenging and lessons are to be learned. What happens in Costa Rico is not excluded from other markets. Lots of dodgy brothers around. But is not a reason to lose the focus. Due diligence is must. Play honest game and you should end up just fine.
@John Woodrich many thanks for the sound advice. It does sound too good to be true, and I read about the founder. They're looking for significant capital and the red lights are flashing all over the place!
@Bradley Gudim I assume your contact started his business in CR then eventually moved to Minneapolis. I can't begin to imagine the challenges of building a successful business in CR while residing in the US.
@Angela Przulj If I were in Melbourne, I wouldn't give CR a second thought! Unfortunately it takes a minimum of 2 honest parties to play an honest game.
Thanks to all of you for your wisdom and perspectives!