Investment Opportunities for your self directed IRA

Buy a Storage Facility

Storage facilities may not be as glamorous as that tropical resort hotel you have been looking for but they can return strong profits on smaller initial investments. Urban areas especially those in major metropolitan areas usually have a strong demand for additional storage facilities. Outlying, rapidly growing areas are often without storage facilities and the need is great with lots of people moving to the area. A nearly unavoidable fact of life is that we all collect more than we can store in our homes. As families and possessions grow and children go off to college more storage space is needed.

Storage facilities usually have fewer associated costs than properties that are occupied by people rather than things. Operating costs for a storage facility are far below the operating costs of resort hotels, office towers or apartments. Costs for repairs and renovations are usually spaced much farther apart and are usually less costly than residential or office properties. The income per square foot is also lower than other properties. However, with the lower maintenance and repair costs this may yield a net operating income (NOI) similar to other types of properties.

If your goal is a stable investment that does not require much oversight in which to place some of your IRA’s funds, a storage facility can be a great opportunity. Because there are recurring expenses (electric bills and labor costs) a self directed IRA is preferable for this type of investment. With your IRA check book you are able to pay for these items instead of having to pay custodial fees every time your IRA pays the electric bill or the salary for your employees. This savings stays in your IRA and provides additional funds for other investments.

In any investment involving your IRA where recurring expenses are a factor you need to be certain that all profits go directly into your IRA and that all expenses come directly from your IRA. Using the wrong check book can trigger a wave of penalties and fees that can put your IRAs tax-advantaged status at risk and cost you dearly. You should always ensure your IRA has enough cash to pay these recurring expenses and that only your IRA pays them.