This example shows the rental income total that can accumulate in your IRA over 10-years assuming the same $200,000 home is rented at $1,600 per month. Note: Rental rates in your area maybe higher or lower than this example.
$1,600 Gross rent per month
$492 Estimate of taxes and insurance per month
$220 Estimate of average management, maintenance and vacancy
$908 Net rent per month
$10,896 Annual rental income
As you can see the net rental income for one year is $10,896. Over 10-years the total rent is $108,960 without a single rent increase during the 10-years. The rental income may be larger or smaller than this example depending on the effects of market conditions and inflation.
However, the purchase of a $200,000 home that appreciates at the national average of 4% per year with normal rental income could be expected to grow your IRA value from $200,000 to $405,000 in this example with no tax consequence. The home could now be sold and the money re-invested in 2 more homes to repeat this performance, or the money could be used for retirement income if retirement age has been reached.
$200,000 Initial home value in SDIRA
$96,000 10-year appreciation
$108,960 Rental income
$405,010 Value at end of 10-year period in your SDIRA
If this were repeated with 2 more homes over 10 more years the IRA value would have grown to $1,215,030 and still no taxes! You (the IRA holder) can accomplish this as a passive investor. Or if you choose, you can rely on Keller Williams to arrange the purchase, management, maintenance, collection of rents, or a more active investor may choose do these activities yourself.
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