I'm just beginning my research of self-directed IRAs to determine how I will use it as a part of my RE investment strategy. My IRA is under 100k and I'm finding that custodian fees, not to mention the requirement to use and pay vendors market value for property mgmt (no sweat equity) may began to nickel and dime my IRA away.

Therefore, wondering if flipping to build the IRA vs. buy and hold may be the best strategy initially to avoid annual custodian fees and property mgmt cost since I don't have a lot to invest. Any thoughts?

@Lynn Burks  

while rental property may be good investment in general, it is more beneficial to own rental real estate under your name instead of in an IRA for couple reasons:

1) There is no tax benefits (depreciation deduction)

2) Leveraged real estate in your IRA is subject to UDFI tax

If you do flip homes in your IRA this maybe considered active business activity and will be subject to Unrelated Business Income Tax (I'm not a CPA, consult with the expert please).

If you fund flips on the other hand, your IRA acting as a bank, this might be better for you. Also you may want to consider investing in trust deeds - again, your IRA is a bank.

Now, to minimize the custodian fees you may want to consider IRA owned LLC (also known as Checkbook IRA), this will give you checkbook control over your IRA.

Another option would be truly self directed Solo 401k, here you act as a trustee of your own retirement plan, without the need for LLC and you don't need a custodian either. This is just one of several major benefits of this Ultimate Retirement Plan. You can learn more in my recent BP blog post HERE.

The topic of self directed IRA and 401k (and investment strategies) has been discussed many times here on the forum so I suggest you do the search and continue educating yourself.

Although @Dmitriy Fomichenko  works for another company and all, I still have to agree with him . :-D 

In my opinion the best option is definitely the Solo 401k. Eliminate the custodian, act as your own trustee, have check book control and direct access to your money, and truly own your financial future! It's a strategy I think could set a smart, driven, and empowered individual free and allow them great autonomy in their investing.

Best of luck in whatever you choose, @Lynn Burks   !

Thanks for the great advice @Dmitriy Fomichenko   and @Jeff Barnes !  It definitely helps me focus my research and gives me clearer direction when setting my RE investment strategy. 

Continued Success!

Lynn