Investing with a SDIRA?

[Brian Jasinski]

Hello BP Community - relatively new to the forum, and had an SDIRA question - did I post this in the right place?

Trying to make sure I understand what owning a piece of real estate in an SDIRA looks like.....

Can anyone comment on my example?

Option #1:  $250K roll over IRA - invest in traditional mutual funds. Assuming 8% annual return with compounding interest, would have roughly $531,700 after ten years.

Option #2:  $250K roll over IRA - convert to SDIRA. Purchase $250K rental property outright. Assuming 3% appreciation, property would increase in value to roughly $335,900 after ten years.

Also, during this time, rent of $1,600/month would be collected, or $19,200/yr.  x 10 years = $192K in rent.  $335,900 plus $192,000 in rent = $527,000 after 10 years.  Not accounted for in this example is property tax costs, insurance costs and maintenance costs.

Is 3% annual appreciation a reasonable historical assumption?  I understand this example does not account for annual rent increases, and the rent might be conservative.

From the little I know about SDIRA's, sounds like all rent collected would need to stay in the SDIRA account, and any expenses for the property would need to be paid out of the SDIRA account.

Do you lose the ability to write off costs like taxes, insurance, repairs, etc. when you hold a property in an IRA? Would it make more sense to purchase a property outright - or to have some amount of mortgage on it?

Overall looks like a comparable investment to a traditional index fund over time, is the main attraction here the diversification angle?

Any insight would be appreciated......Thank you