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Self-Directed Ira Real Estate Rental Income

A table listing the steps for using a self-directed IRA for real estate rental income.

Investors have traditionally leaned on personal savings accounts such as 401(k)s and IRAs to save for the future. However, some concerns are associated with them compared to other investment options, such as limited investment control, fees and expenses, and market volatility.

That’s why many investors are turning to alternative investment options like real estate to fill in the gaps left by other investment vehicles. For those with savings tied up in savings accounts like IRAs, real estate benefits, such as rental income, may seem out of reach. However, while traditional IRAs don’t allow for real estate investment, a specific kind of IRA does.

In this article, we’ll explore how to use a self-directed IRA for rental income generation through real estate and how Canyon View Capital can help you enjoy passive real estate income.

Self-Directed IRA Real Estate Rental Income: How to Get Started

Unlike traditional IRAs, which limit your investment choices to conventional options like stocks and bonds, self-directed IRAs offer significantly greater control over your investment decisions, allowing you to manage and diversify your portfolio as you see fit.

In order to do so, you’ll have to follow a few steps very closely.

 

Steps to Using a Self-Directed IRA for Rental Income

  1. Establish a Self-Directed IRA 

Open a self-directed IRA with a qualified custodian who allows for real estate investments. Ensure compliance with IRS regulations for self-directed IRAs.

  1. Fund the Self-Directed IRA

Contribute funds to your self-directed IRA. This can be done through contributions, transfers, or rollovers from other retirement accounts.

  1. Identify Rental Property

Research and identify your rental property. This should be one that fits within the criteria allowed by your self-directed IRA.

  1. Perform Due Diligence

Conduct thorough examinations of the property and aspects of the transaction. This includes property inspections, reviewing financials, and assessing the potential rental income and any expenses.

  1. Purchase the Property

Inform your self-directed IRA custodian to use the IRA funds to purchase the identified rental property. All transactions must go through the IRA custodian to ensure compliance. 

  1. Manage the Property

As a property manager, you will manage the rental or hire a property management company to handle day-to-day operations. All income and expenses related to the property must flow through the self-directed IRA.

  1. Collect Rental Income

When you receive income from a property, it must be deposited and held directly in the self-directed IRA. 

  1. Handle Expenses

Ensure that you pay for all property-related expenses. This includes maintenance, property taxes, and insurance, which must be paid directly from the self-directed IRA.

  1. Ensure Compliance

It’s imperative that you adhere to IRS regulations and guidelines for self-directed IRAs. All transactions should be for the benefit of the IRA.

  1. Retain Records

Keep detailed accounts of all transactions, income, and expenses associated with the property. This is important for tax reporting and compliance. 

  1. Plan for Required Minimum Distributions (RMDs)

Be aware of RMD requirements, especially if you are near the age where distributions are mandatory. Consult with a financial advisor or tax professional. 

  1. Monitor Performance

Keep track of your property’s performance and ensure that you are making strategically sound decisions to enhance returns or address any issues that pop up.

Once you’ve followed the steps, you’ll be well on your way to using your self-directed IRA for real estate rental income. However, it should be noted that, like any investment, real estate carries some level of risk. 

Also, keeping up with current trends and market fluctuations and effectively managing your property can be demanding. If the steps listed in the table seem like a lot to keep track of, that’s because they can be.

If you’re an investor who likes the idea of expanding your portfolio using a self-directed IRA to invest in real estate but is hesitant due to the increased responsibility and risk, the good news is other options can help you have your cake and eat it, too.

That’s where Canyon View Capital comes in.

Canyon View Capital Offers Real Estate Investing Options for Self-Directed IRAs

If you’re looking to leverage self-directed for real estate rental income, you’ve come to the right place. At Canyon View Capital, we managed a portfolio of multifamily real estate valued at over $1 billion1, and we want to use that to help you enjoy the benefits of real estate investing.

We understand that many investors with self-directed IRAs may like expanding their portfolio but may be deterred by the commitment often required to manage investment properties successfully. That’s why we offer real estate investment options that allow investors like you to use their self-directed IRAs to invest in real estate without having to manage properties.

We do the heavy lifting for you while you enjoy passive rental income and other tax benefits through one of our real estate investment funds. 

Ready to upgrade your portfolio with diversified, stable investments?

For over 40 years, Canyon View Capital has managed, owned, and operated real estate now valued at over $1B2. Our buy-and-hold strategy, concentrated in America’s heartland, is designed to provide consistent investment returns. 

Want to learn more about self-directed IRA real estate income? Reach out today! 

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1,2$1B figure is based on aggregate values of all CVC-managed real estate investments as of March 31, 2023.  

Eric Fisher, Chief of Staff

Eric joined Canyon View Capital in August 2021 with 15 years of hotel management experience grounded evenly between Property & Corporate Operations, and Business Development & Acquisitions. After $500M+ in hotel acquisitions, Eric uses his nuanced understanding of the acquisitions and transitions processes to support CVC real estate investments. His professional versatility makes Eric an invaluable resource for the President and Executive Team in all business functions, including Investments, Operations, and Strategy.

This article is being provided for informational purposes only.  The content is not an offer or invitation for subscription of purchase of or a recommendation to purchase real estate or securities.

Information and opinions provided herein reflect the views of the author as of the publication date of this article. Such views and opinions are subject to change at any point and without notice. Some of the information provided herein was obtained from third-party sources believed to be reliable but such information is not guaranteed to be accurate.

This article does not provide any individual advice. The author has not considered the investment objectives, financial situation, or particular needs of any investor. Any forward-looking statements or forecasts are based on assumptions only, and actual results are expected to vary from any such statements or forecasts. No reliance should be placed on any such statements or forecasts when making any investment decision. Any assumptions and/or projections displayed are estimates. No investment decision should be made based solely on any information provided herein. Past performance is not necessarily an indication of future results.

Diversification does not guarantee a profit or protect against a loss in a declining market. It is a method used to help manage investment risk.

Nothing herein is, or is intended to constitute, investment, tax, or legal advice or a recommendation to buy or sell any types of real estate, securities, or investments.  There is a risk of loss relating to any investment in real estate or securities, including the risk of total loss of principal, which an investor will need to be prepared to bear. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will be profitable or suitable for a particular investor’s financial situation or risk tolerance. You are encouraged to consult your investment, tax, and legal advisors regarding you particular circumstances, and what may be advisable for you.

Eager to Find Alternatives to Stock Market Fluctuations?

Canyon View Capital’s approach is tailored for tax-advantaged, passive income, offering you the chance to become a hands-free real estate investor. We prioritize client satisfaction and respect, ensuring that both seasoned and new investors feel heard and valued by our dedicated team

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This page is being provided for informational purposes only.  The content is not an offer or invitation for subscription of purchase of or a recommendation to purchase real estate or securities.

Such views and opinions are subject to change at any point and without notice. Some of the information provided herein was obtained from third-party sources believed to be reliable but such information is not guaranteed to be accurate.

This page does not provide any individual advice. CVC has not considered the investment objectives, financial situation, or particular needs of any investor. Any forward-looking statements or forecasts are based on assumptions only, and actual results are expected to vary from any such statements or forecasts. No reliance should be placed on any such statements or forecasts when making any investment decision. Any assumptions and/or projections displayed are estimates. No investment decision should be made based solely on any information provided herein. Past performance is not necessarily an indication of future results.

Diversification does not guarantee a profit or protect against a loss in a declining market. It is a method used to help manage investment risk.

Nothing herein is, or is intended to constitute, investment, tax, or legal advice or a recommendation to buy or sell any types of real estate, securities, or investments.  There is a risk of loss relating to any investment in real estate or securities, including the risk of total loss of principal, which an investor will need to be prepared to bear. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will be profitable or suitable for a particular investor’s financial situation or risk tolerance. You are encouraged to consult your investment, tax, and legal advisors regarding you particular circumstances, and what may be advisable for you.

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