Would you start a new self-directed IRA to hold long term real estate investments?
I came across this BP forum post from a few years back discussing the merits of cashing out a 401k to invest in real estate.
http://www.biggerpockets.com/forums/49/topics/7460...
There was some good discussion but the post was really geared towards people that already had 401k accounts and whether or not they should roll them into a self-directed IRA. I can see a SDIRA as a good alternative when you already have a pile of cash in a 401k and want to invest in RE instead of stocks/bonds, but does it make sense when starting from scratch? Would you start a SDIRA specifically to hold investment properties?
It seems to me like you can invest in real estate using a Roth and cash out tax free during retirement. Assuming you eventually run out of 1031 exchanges that is a better deal than holding RE in an LLC and eventually paying taxes. But I have read investing in RE using an SDIRA is restrictive and involves some red tape. Do the benefits outweigh the costs? Is the play to put some REI properties into a SDIRA for retirement and keep most outside for income before retirement? Looking forward to hearing your take on this issue!