Checkbook IRA cash management

[Devin Callon]

My checkbook IRA owns a rental property. The rental income just sits there in a non-interest bearing account until I invest in something. This bugs me. I am currently self-managing the property but I'm considering switching to Stessa rental management software for it's advertised "Landlord Banking". It's essentially Stessa partnered with a 3rd party bank where the rent payments are ACH-ed into and it is a high yielding account. Stessa calls it a "Cash Management Account". I'm not exactly sure which bank they use because Stessa does not name it on their website but people here on biggerpockets seem to be happy with it. I haven't seen any mention of this setup in regards to IRA investing though. If I open the Stessa account and the linked high yield Cash Management Account in the name of my checkbook LLC does anyone see a problem with this set up if I left a good portion of the rental income to sit in that high yield account? As I am set up now, all rent proceeds go into my checkbook LLC account and rot there until I accumulate some and put it to use elsewhere. The Stessa rates are attractive enough that I would let it accumulate in their high yeild account until I invest in something. Does anyone see a problem with this? Would I have to move the money into my original LLC checking account at some point? Thanks for your advice.

[Brian Eastman]

@Devin Callon

Until last year, having checkbook IRA money in a non-interest bearing account was no big deal, because most savings rates were slightly better than nothing. We are in a window where idle capital is an opportunity cost, so seeking interest income until the rates change again makes sense.

The best place to start will be with your checkbook IRA provider. If you worked with a quality firm, they should be able to assist you with questions about the mechanics of moving funds around.

The bottom line is that if all accounts are held in the name of the LLC and associated with the LLC tax ID, they are interchangeable - kind of like different drawers in the same desk.

If the relationship with Stessa is in the name of the IRA owned LLC, you should be fine. You will, of course want to do some homework to identify the bank that Stessa is using and ensure they are FDIC insured and in good health.