Using Your Investments to Buy Your Dream Home in Costa Rica IRA’s, 401k’s, and Securities-Backed Lending Explained

Many clients are surprised to learn that their investments and retirement funds can be leveraged to purchase their dream home or investment property in Costa Rica. If you’ve assumed your hands are tied due to pension fund rules, regulations, or traditional financing limitations, think again.

The truth is, you can put your investments to work—creatively and effectively. Options like self-directed IRAs, 401(k) loans, and securities-backed lending provide practical solutions for funding Costa Rican real estate.

Self-Directed IRAs

Most people think IRA funds are off-limits for foreign real estate investments. Not true! With a self-directed IRA, you can use your retirement savings to purchase property in Costa Rica, provided it’s set up correctly with the help of a qualified custodian.

How It Works

Establish a self-directed IRA through a custodian.
Direct your IRA funds toward non-traditional investments, including real estate or businesses.
Alternatively, set up a checkbook IRA by creating an LLC to manage your investments directly—this can streamline paperwork and simplify the purchase process.

Rules You Need to Know

The IRS has specific guidelines for using IRA funds:

Note: Some clients have purchased investment properties pre-retirement and later bought the property from their IRA to use as a personal home. While some advisors consider this acceptable, you must consult your accountant or custodian to avoid costly mistakes.

Using Your 401k to Fund Your Costa Rican Property

If you have a 401k, you have more flexibility than you might think. While you can’t invest directly in real estate, you can borrow against your 401k to fund your Costa Rican dream home.

How It Works

Rollover Option

Securities-Backed Lending

For clients with a securities portfolio, securities-backed lending (SBL) offers an excellent way to purchase property in Costa Rica while keeping your investments intact.

What is Securities-Backed Lending?

Securities-backed lending allows you to borrow against your investment portfolio (stocks, bonds, etc.) as collateral instead of using the property itself. With minimal requirements and competitive interest rates, this strategy provides a cost-effective alternative to traditional mortgages.

The Numbers: An Example

Let’s say you have a portfolio valued at $2,000,000 with an annual return of 6%. You borrow $1,000,000 at an interest rate of 3.75%. Here’s how it breaks down:

Portfolio Value: $2,000,000

Annual Return (6%): $120,000

Loan Value: $1,000,000

Loan Interest (3.75%): $37,500

Net Yearly Return (2.25%): $82,500

In this scenario, you’ve purchased a property in Costa Rica while keeping your investments growing and still earning returns. If you turn the property into a rental investment, your ROI can increase significantly.

Advantages of Securities-Backed Lending

Make Your Dream of Costa Rican Living a Reality

Your investments have the power to fund more than just traditional retirement—they can open the door to life in paradise. Whether through self-directed IRAs, 401k loans, or securities-backed lending, you have options to purchase your dream property in Costa Rica.

Explore more about life and opportunities in Costa Rica:

Ready to take the next step? Explore our luxury property listings to find your dream home in the world’s best climate and start living the lifestyle you’ve worked so hard to achieve.