Investing Your IRA Savings into Rental Real Estate

Investing your IRA savings into rental real estate can be a lucrative way to diversify your retirement portfolio, especially when market conditions favor property investments. As of now, vacancy rates are at a 70-year low, making rental real estate a compelling option for investors looking for steady returns and potential capital appreciation.

Understanding Vacancy Rates

Vacancy rates are a critical metric in real estate investing, indicating the percentage of all available units in a rental property that are vacant or unoccupied at a particular time. The formula for calculating vacancy rates is:

For example, if you have a property that was available for rent for a full year (365 days), and it was vacant for 235 days, the vacancy rate would be:

This high vacancy rate is undesirable, but current low vacancy rates nationwide suggest that properties are more likely to be rented out quickly, reducing the number of days they remain vacant.

Why Invest in Rental Real Estate with Your IRA?

  1. Steady Income Stream: Rental properties can provide a consistent and reliable income stream, helping to boost your overall retirement savings.
  2. Appreciation Potential: Real estate has the potential to appreciate over time, which can increase the value of your investment.
  3. Tax Advantages: Using a self-directed IRA to invest in real estate can provide tax-deferred or tax-free growth, depending on whether you use a traditional or Roth IRA.

Types of Rental Real Estate

There are various types of rental real estate you can invest in, each with its own potential benefits and risks. Some of the 20 types of rental real estate include:

  1. Single-family homes
  2. Multi-family homes
  3. Apartments
  4. Condos
  5. Townhouses
  6. Vacation rentals
  7. Commercial properties
  8. Retail spaces
  9. Office buildings
  10. Industrial properties
  11. Warehouses
  12. Storage units
  13. Mixed-use properties
  14. Student housing
  15. Senior living facilities
  16. Mobile home parks
  17. Farmland
  18. Special purpose properties
  19. Short-term rental properties
  20. Co-living spaces

For a comprehensive list and detailed descriptions, you can refer to sources like

Managing Rental Properties

Managing rental properties can be time-consuming and complex. Many investors choose to hire property management companies to handle the day-to-day operations. Typical management fees are taken as a percentage of the total assets under management (AUM). The amount is quoted annually and usually applied on a monthly or quarterly basis. For example, if you’ve invested $10,000 with an annual management fee of 2.00%, you would expect to pay a fee of $200 per year.


Investing your IRA savings into rental real estate can be a strategic way to diversify your portfolio, generate steady income, and take advantage of potential appreciation. With vacancy rates at historic lows, the current market conditions are favorable for investors. However, it’s essential to conduct thorough research and consider hiring professional property management to maximize your investment’s potential. By understanding the types of rental properties available and the costs involved, you can make informed decisions that align with your retirement goals.

uDirect IRA Services, LLC is here to help you~!  We are not a fiduciary and we do not offer tax or legal advice. We do not recommend specific investments, rather we guide you through the process to self-direct your retirement savings into assets you choose.  To get started, we offer a free consultation. Schedule yours HERE. To open an account, click HERE.