Self-directed IRA

I’m exploring the idea of investing in property through a self-directed IRA.

Opportunities

• Zuz’s parents are not disqualified persons with respect to a self-directed IRA I own. That means I could employ them as property managers and contractors, and that I could rent the property to them. This could result in a convenient and cost-saving arrangement.
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• Along with long-term investment in stocks, this could help diversify our retirement portfolio.

Risks

• If we move away from Lockport, owning property here will become much more expensive and troublesome. This could happen because I fail to get tenure, because Zuz or I take a job elsewhere, because of a family emergency, a natural disaster, or for other reasons I can’t think of now.
• If we mess up the rules, the investments could be expelled from IRA protection. This is really expensive.
• If the local economy does not prosper, our investments will not grow as fast as they might had we invested in stocks.
• Investments in real estate are illiquid. It would be hard to borrow against them.