Author Topic: SDIRA owned condo for FIRE planning  (Read 289 times)


  • 5 O'Clock Shadow
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SDIRA owned condo for FIRE planning
« on: July 01, 2018, 05:02:22 PM »
Hello Fello Mustashians,

There is another post on SDIRA's but I wanted to start a new one for those who have made the leap into this type of retirement investment and be able to compare notes on how it is going. 

In my case, I opened a SDIRA in 2013 with around $50K of traditional IRA funds (three different sources) and purchased a 2 BR/2BA condo (near my main house and in an area that I could see spending my retirement years part time) that was owned by FNMA after a foreclosure (similar units in the complex had sold for up to 100K prior the real estate bubble collapse). I'll admit that it hasn't been smooth sailing since then as I have contributed (with some of my annual contributions to my IRAs) funds to make some improvements to the unit as well as keep the account balance in the positive.  I have been able to keep it rented (using a property manager) for the majority of the time and barring any maintenance issues it has around a $500 plus positive cash flow each month.  Based on recent sales comps, I estimate it is worth $75K or more.  My account balance is negligible right now due to some improvements I made.

Now, how this factors into my long term FIRE planning:  Since I can't live in the property until I turn 59.5, I'll continue to keep the property rented until then and allow any positive cash flow to build up in the SDIRA account.  Once I turn 59.5, I could start living in the property and the monthly "rent" would be my distribution from the IRA which I would pay the applicable taxes on. Of note, in my retirement years, I do plan to live part time overseas in some low cost of living locale...mustachian style. So, I can adjust the amount of time I live in the condo and therefore the distributions from the SDIRA depending on my overall financial situation.

The other SDIRA posts pointed out many of the negatives of the SDIRA owning real estate and I do agree with many of the points and am no way suggesting that my case is a clear cut winner and everyone who reads this should jump on the SDIRA real estate wagon.  But, I am curious if anyone is farther along in the timeline on this than I am and has any other considerations to point out.  From my current vantage point, I believe I have solidified a place I will be happy to live in once I turn 59.5 and at a very reasonable cost.  Plus, instead of drawing 4% out of my investments to help pay for a place to live, I can live in my investment asset and it continues to exist in its complete form and appreciate (hopefully...and barring any natural disasters).

Final note:  I do plan to retire earlier than 59.5 but haven't settled exactly on the year yet.  But, I hope that my condo in my SDIRA will provide part of the long term FI that allows me to RE!       

Cheers, Wes