rent collection challenge around self-managed SDIRA owned property
I understand that rental payments for property owned by my SDIRA account (custodian, not LLC-type) need to be handled in an 'arm's length' fashion. I haven't found a property management software that will collect the rental payments and subsequently process them into my SDIRA custodian's online payment portal. And I understand that having a tenant make the payments directly into my account is not a good practice. Do you have a suggestion on how to do this without hiring a brick-and-mortar type property manager (and without transferring property into an LLC type SDIRA)? Can I, within SDIRA guidelines, have the payments paid into an escrow-type account & then make the transfers into the SDIRA portal myself? And if so, any recommendations on where to find this? Or is there a payment processing service I can hire to make these transactions at a reasonable fee? Does anyone else have this issue? Thanks!
Most Popular Reply
There are checkbook IRA options that use a trust instead of a LLC, which eliminates the CA franchise tax.
Partnerships are a complicating factor, however. You do not want to form a partnership trust, so each IRA would need a trust and they could then hold title as tenants in-common.
Setup properly from the get-go, it may have been a better solution. The one-time costs of trust formation would be offset by a more usable structure and reduced yearly IRA custody fees. Changing horses mid-stream is never optimal, however.
It would probably be cheaper and simpler to just get a property manager.