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Ken Barker is an international merger and acquisition specialist. Formally a vice-president at one of the United States' “front line” brokerage firms,  Mr. Barker presently focuses on the development, investment, and starting of international venture limited partnership funds. Mr. Barker has initiated and completed transactions totaling over a billion dollars, globally. Additional Resources Offshore Investments  Articles by Ken Barker  Contact Kenneth Baker

We all (US Citizens) know of that little box on the 1040 that asks if we have any offshore interests or signing authority over offshore bank accounts. Some of us might check yes, some of us might check no. That is a question that can only be answered by each and every one of us, and is not part of this article. No opinion is expressed nor implied. This article is about a sheltered income stream, coupled with an IBC, and a pretty decent income. Yes, I know that I stated the income thing twice in the same sentence, but hey, lets face it, that’s what we are all looking for anyway. Lets start with what this investment is, and is not. This investment is a lower risk, medium term investment that has some pretty good fringe benefits to it. The investment can carry

It seems that there are parts of the country that force people that are behind on their real estate taxes to seek out and procure a mortgage to pay off the debt owed to county or state. This is a good deal for the government because they do not have to worry about tax certificate sales, and they get their money without delay. Isn’t it always that way with governments?

This is also a good deal for the people funding the mortgages because the state government allows these Tax Mortgages to be placed ahead of any other existing mortgage or lien (except IRS tax liens). What does this really mean?

First, the loan is very well secured; the typical loan to value is less than 12%. Second, if the loan goes into default, and a foreclosure is necessary, no big deal during my investigation of this, I discovered that if notified, 8 out of 10 “main mortgage” holders would simply buy out the tax loan. Lastly, on the remaining 2, if it did go to foreclosure, I would imagine that someone, or at least the other mortgage would bid higher than twelve cents on the dollar.

These mortgages are originated in the US, sold to an IBC, repackaged into smaller blocks and are now available to you and to me. The loan is serviced (payments collected) by a local company that specializes in this form of collection. As the funds are collected, they are sent via wire transfer to the owner of the note – the International Business Corporation.

The IBC that owns the note is free to conduct any other form of business that is so desires. There are no restrictions on moving the funds. The IBC is domiciled in Panama which is one of the top spots for an IBC.

I feel that this is one of the best ways for someone to “go offshore” while getting more than just an empty corporation. Lets take a look at the advantages of going offshore, or more precisely, the effects of taxation on an income stream.

The example below assumes a capital gains rate of 28%, an income tax rate of 20%, and a return on investment of 10% per year. The single initial investment is 18,000 US. This is for illustration purposes only.

The example above shows the advantage to Non-taxable events. As the chart plainly illustrates, the investment doubles in 8 years without tax, and 11 ½ years with tax. Momentum continues as the compounding effects are quickly realized. 

With any investment, suitable due diligence is required. Following is a check list of some of the information that you may want request and to consider before investing in anything, either on shore or off-shore:

1. Can I afford this investment amount? Is it going to take food off of the table or can I justify this investment?
2. What is the risk? Is it appropriate for my tolerance?
3. What is the investment?
4. How do I get my money back, or if it pays interest, how do I get that?
5. Is the interest or appreciation believable or is it to good to be true)
6. For this type of investment you should consider the following:
a. Who is the escrow agent?
b. What are the maturity dates of the loans?
c. What is the total Loan to Value of the property?
d. Is this loan adequately secured?
e. Who is the servicing agent?
f. If needed, does the servicing agent file foreclosure notifications?

The above is by no means an all-inclusive list. Many aspects of due diligence are nothing more than common sense, with a few items of financial interest thrown in.

To recap what this investment is:

1. First position mortgage loans on residential real estate.
2. Loan to Value <20%.
3. Income of 12-15%, face value is adjusted to achieve this return.
4. IBC is owner of the note.
5. Real estate (collateral) located in the United States.
6. IBC incorporated in Panama.

As with any investment, it is prudent to conduct appropriate due diligence. I would be happy to provide you with the information that I have discovered concerning this rather unique opportunity, and to put you in touch with the principals involved.

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