Invest in Real Estate (RE) via Self-Directed IRA

[Eric Johnson]

Greetings BP,
Has anyone used a self-directed IRA to invest in RE? If so, what was your experience? I'm considering rolling some or all of my ROTH IRA funds into a self-directed IRA to invest in RE

[Matt Devincenzo]

I currently have a ROTH IRA that is self directed and have 3 rentals in it, my family as a whole have about 6 rentals and 2 mortgages that were taken back from selling property.

So my take on it is it's been great buying property in my IRA, the biggest difficulty is the length on time to disburse funds, which isn't too bad after you get the process and paperwork figured out. And that all of the expenses have to go in and out of the IRA.

So what I do is have my PMs hold a maintenance reserve and pay for things from that. Now funds for repairs go out immediately, and I don't pay any fees for processing a payment ect.

Now while I think having the rentals in my IRA is great, since I've been on BP I'm leaning to sticking with notes in my IRA. With RE you don't get the tax benefits which is ok but you also lose the ability to leverage, and RE has maintenance and PM.

Notes have a lot of the same benefits of RE as far as being tied to real property, but you never get maintenance requests and servicing is much cheaper than PM. You do loose the possibility for appreciation but that is just the trade off.

So would I buy another rental in my IRA absolutely, but I think that notes may be a better return for my IRA and keep my rentals in my name to maximize the benefits.