Leveraged property vs. private lending in Roth SD-IRAs

[Eric Chase]

BP Team,

I'm looking for perspective/thoughts from those of you who conduct private lending from your SD-IRAs and those of you who hold leveraged property therein. Ideally, I'd love to hear from someone who has done both! With leveraged property, I'd be concerned about unforeseen expenses my IRA reserves couldn't cover, I couldn't take advantage of depreciation, taxes just got more complicated, etc. It seems to me that there are far more benefits in lending. Can you change my mind?

Cheers, everyone!

Eric

[Dmitriy Fomichenko]

@Eric Chase, 

I've done both and generally speaking I prefer my retirement account being the lender, rather than the owner of the property. The main advantages for me are: 1) completely passive, and 2) contractually guaranteed, predictable returns 10%+. Owning rentals generally better personally, get the tax benefits.

On the other hand I came across a deal (single family) about 6 years ago, at that time I did not have the funds available to buy this personally so I purchased it inside of my retirement account. Used leverage, 40% down. The property been cash flowing few hundred dollars and now it is worth about twice what I paid for it.

The bottom line it comes down to a particular situation, particular investor, and particular investment. You have to analyze and see what works best for you.