I am in need of some advice on using lease options with a self directed IRA. I have recently opened a IRA account and I want to start lease optioning houses out of my account. As far as I know I can have the IRA put up the option consideration, have the IRA rent the property and have the positive cashflow go back to the IRA. I could then assign the option for a fee to an end buyer and that money also would go to the IRA.
Where I am having a problem is understanding the property management aspect of this type of strategy. I know that when you buy –not lease option — a rental into an IRA, all maintenance has to be done thru the IRA and you cannot be involved with anything related to the rental yourself since the IRA owns it. From what I have heard that is why most people will choose to hire a property manager to take care of the maintenance, etc so they themselves are not involved.
Is this also the case when you are using a lease option instead of an outright purchase of a rental? I would really hate to have to hire a property manager as part of this strategy since that would eat up some of the cashflow.
I know I need to discuss these concerns with the plan administrator but just wanted to hear from some of you that I am sure have experience with this strategy so that I am better prepared to explain and understand how is done.
As always, any feedback will be appreciated. Or, if there’s any information on this here in CFD, I would be glad to find out where.