Strategy Considerations for Rental Cash Income in a Real Estate IRA

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IRA investors may not want their tax-advantaged savings sitting stagnantly while they wait for retirement to roll around. This is why many investors turn to self-directed IRAs to invest in alternative assets that can grow their retirement savings for them. With a self-directed real estate IRA, retirement investors can enjoy scheduled cash flow into their accounts through rental income.

If an investor’s self-directed IRA is earning rental income, and the IRA isn’t paying off debt or distributing cash to the IRA holder, the investor may consider his or her options for utilizing the cash surplus. Below are a few strategy considerations for IRA real estate investors who are earning rental income.

Portfolio Diversification

Once your property has been acquired, it may be a good time to consider cash strategies. Assets with low minimum investment amounts and high liquidity (such as private loans and private funds) can be potentially lucrative alternative IRA investments. Low-cost assets can fit nicely into an account holder’s overall real estate investment strategy.

Property Renovations

It’s important for investors to keep their long-term investment goals in mind. If an investor wants to eventually distribute a property for their personal use, perhaps a portion of rental income could go toward improving the property. Expenses inherent to IRA-owned real estate must be covered by the IRA itself, so account holders must ensure there is enough available IRA cash to pay for damages or upgrades to the property.

Stand Pat to Avoid New Fees

IRA provider fees are another factor to keep in mind when considering opening new asset accounts or transferring cash between accounts. Investors should calculate the cost of redeploying their IRA cash to make sure the numbers will work in their favor. In some cases, by not initiating new investments, idle cash can wind up being the most economical choice for an investor.

Feel free to give us a call at 877-742-1270 or send us an e-mail at to discuss your alternative investment options.