STR with Self directed IRA or solo 401K

[Rhonda Blue]

I have been researching all the newsgroups and asking friends what they do regarding either self directed IRA OR Solo 401K to purchase a property and then host it for rent on VRBO? Suggestions and basically If I have a checkbook are there any issues I need to watch out for?

[Dmitriy Fomichenko]

@Rhonda Blue

If you decide to buy a vacation rental property with your IRA or 401k you should not manage it yourself. According to the IRS rules you are considered to be disqualified person to your IRA and as such are prohibited from providing any services to your IRA:

https://www.irs.gov/retirement-plans/plan-particip...

If you had a long term tenant you probably could get away without using third party property manager, however vacation rental will have high turnover, which will require significant involvement from you, and would be considered as you providing service to your IRA, which is prohibited.

If you can handle the management yourself on vacation rental I would suggest you buying this property personally, if you do this right it can be very profitable investment. However, when it comes to retirement account you should consider passive investment options such as private lending, investing in a syndication or private placement, buying a trust deed or investing in a note fund.