All Forum Posts by: Mike Lambert

Hi Natasha,

You can choose between the two. In doing so, bear in mind that the cost and admin of a corporation is higher and that the tax treatment is different:

1. With a fideicomiso, the first $200k is tax-free when you sell.

2. With a fideicomiso, the gross income is taxed through a withholding tax whereas, with the corporation, the rate, you can deduct expenses but the taxation rate is higher.

Hi @Natasha Rooney, you can do either or.

@Alex Scattareggia, the withholding tax, as you suggested, doesn't have to be an issue providing that your property is profitable enough. As you mentioned, you can get overall higher profitability than in the US or Canada but, like in those market, long gone are the days when you could buy any property and make a killing as an STR.

Too many people go to Mexico and buy any property because it looks good. That can work for a lifestyle buyer but isn't ideal for an investor. Investor needs to do their home work.

So, @Hannah Tate, great job asking the community for help. You're on the right path.

Hey Alex,

I'm not sure what you mean by converting. You can do both at the same time. It's a matter of managing your calendar. In Mexico, as you know, when you rent to visitors, you generally don't do LTR. It's automatically MTR (by the month).

The best strategy is to do MTR in the low season and STR in the high season. Of course, if somebody wants to do an MTR in the high season and at a very attractive rate, you might as well take it. Similarly if somebody wants to rent for multiple months right away at an attractive rate, you might take it too, especially if it's in the low season.

 Sure. Happy to help if I can.

Nick, as you mentioned, Mexico's the best for that matter indeed. Pretty much all the banks in Mexico lending to foreigners offer better terms but there are other countries offering better terms as well. On the other hand, other countries, like Nicaragua for example, likely offer worse terms, if you can get a mortgage at all but I'm not sure anybody would want to buy an STR in those countries anyway.

@Nick Belsky

I'm not sure why you're generalizing the mortgage conditions in Belize to the rest of the area because they're very different. I've been investing in the area for years (not in Belize) and I haven't seen the kind of conditions you're describing so maybe they just apply to Belize. For example, in Mexico, you can put less than 40-60% down, interest rates are in the single digits and you can get 20- to 30-year mortgages (and you can't get anything shorter actually) and the right areas would fit within @Richard Foltys' criteria. As Nick mentioned, Airdna would be helpful here.

Hi Jake, the fact that you're a US citizen/resident has absolutely no bearing on the process. The rules are the same for everyone. You need to research/know the rules, laws and regulations (including HOA if applicable), like you'd do in any US city.

@Rusdianto Rusdianto

Leasehold isn't ownership and so you don't have control. And, then, as time passes, because the lifetime of the lease decreases, the real value of the property actually decreases towards 0 until the lease gets renewed and there's absolutely no guarantee that it will. The purpose of owning real estate is to have the value go up over time, not to 0. I'd never buy under leasehold but, if you want to "own" in Bali , you have to accept that. Otherwise, there are many other countries with high growth potential, tourism demand, and relatively affordable prices compared to Western markets that don't discriminate again foreigners that way.

What you mention about corporations is interesting. But that leaves me asking: If the Indonesian government indeed doesn't want foreigners to own/control land in the country, why would they allow for such an obvious loophole? In other words, what's the catch? There are other countries in which you can buy through a corporations but foreigners cannot own or control more than 49% of the company.

Yes, I've been investing overseas for years and help many others doing so but investing internationally differs from country to country so asking about international and specifically in Bali.

There can be fraud everywhere, including in the US, so you should always beware and the risk will be higher or lower, depending on the country. When it comes to taxes, it'll depend on the country.

I personally haven't and I won't invest in Asia because you almost never can own the land freehold. That's the problem because you have no ultimate control of your property and it's a sign that you're treated second class compared to the locals . I don't know about you but I don't want to invest money where I'm treated second class, with all the consequences that go with that.