Multi-Family Real Estate Investment Opportunities with a Self-Directed IRA
By Michelle Clardie on 07/10/2025.
Reviewed by Dan Gatsby.
Self-Directed IRAs (SDIRAs) are growing in popularity thanks to the flexibility and control they offer to investors. Unlike standard retirement accounts, which are limited to securities like stocks, bonds, and funds, SDIRAs offer access to alternative investments, including commodities, collectibles, and real estate.
Multi-family real estate (properties with dwelling spaces for multiple households) is an especially intriguing SDIRA investment vehicle for investors, but there is some confusion about how to invest in multi-family properties with a Self-Directed IRA. This article will clear up the confusion.
First, we’ll explain why multi-family investments are such an appealing investment vehicle. Then we’ll discuss why it makes sense to invest in multi-family with a Self-Directed IRA. And finally, we’ll provide options for investing in multi-family real estate with your SDIRA.
7 Reasons Why Multi-Family Real Estate Is an Attractive Investment
Greater passive income potential. More units can generate more income. Plus, hiring professional property management is usually cost-effective, making your rental income more passive than if you were to manage the property on your own.
Faster portfolio growth. It’s easier to build a real estate portfolio when you can buy one building with several units instead of acquiring multiple single-family homes one by one.
Built-in income stability. Having multiple units provides some protection against vacancy losses. If you own a duplex, for example, and one tenant vacates, you still have the other unit generating money while you find a qualified renter for the vacant unit.
Lower costs per rental unit. Shared expenses like landscaping, insurance, and a single roof covering multiple dwellings help keep costs down compared to managing several separate houses.
More control over property value. Unlike single-family homes, which largely rely on market trends, multi-family property values are tied to income generation. So if you can boost the rental income (through value-adds like renovations, amenities, and good property management practices), you can force appreciation more easily.
Reduced risk. Real estate has proven to be less volatile than the stock market, and rental demand for multi-family housing tends to remain strong in both buyer and seller markets, further reducing market risk.
Added Benefits of Investing in Multi-Family Through a Self-Directed IRA
You can absolutely take advantage of the benefits of investing in multi-family real estate as an individual rather than investing through your SDIRA. However, using your retirement account to invest in real estate offers additional benefits, such as:
Tax-deferred or tax-free growth. With a traditional SDIRA, rental income and capital gains accumulate tax-deferred, meaning contributions are tax-deductible, and you won’t owe taxes until you take distributions in retirement. With a Roth SDIRA, all earnings, including appreciation and rental income, can be withdrawn completely tax-free as long as you follow Roth withdrawal rules.
Compounded reinvestment. Since there are no immediate taxes on income or gains, 100% of your profits stay within the SDIRA. This allows you to reinvest faster, buying more properties, improving existing ones, or covering expenses without losing a portion to annual taxes.
Shielding cash flow from self-employment taxes. Unlike some investment structures outside a retirement account, rental income in an IRA isn’t subject to self-employment or payroll taxes.
Diversification of retirement investments. Adding tangible, income-generating property helps to balance out traditional securities in your retirement portfolio.
Estate planning advantages. Assets in an SDIRA can be passed to heirs with continued tax benefits, particularly with a Roth IRA, where beneficiaries may also withdraw income tax-free under certain conditions.
Options for Investing in Multi-Family With a Self-Directed IRA
Now that you understand the benefits of investing in multi-family opportunities with your SDIRA, let’s explore the options for doing so.
While SDIRA rules prevent you, as the account holder, from personally managing a development, you can hire a company, like Gatsby Investment, to manage the project on behalf of your SDIRA. Gatsby’s Multi-Family Built-for-You Developments are designed for passive real estate investors who want every detail of their new development professionally managed by an experienced team of real estate analysts, architects, designers, and contractors.
Multi-family developments can be:
Built to sell: Designed to appeal to investor-buyers for a quick sale upon completion of construction. This option allows investors to earn comparatively quick returns, which can then be reinvested in another project.
Multi-family rentals are long-term investments in multi-family buildings primarily for the recurring rental income. Compared to multi-family development, multi-family rentals are less opportunistic, but provide faster cash flows because there is no need to wait through the construction period before leasing up and collecting rents.
Real estate syndication is a perfectly-suited vehicle for investing in multi-family real estate through your Self-Directed IRA because it allows you to passively participate in professionally managed multi-family projects (both developments and rentals) without prior experience or your own network of industry experts.
Syndication pools funds from multiple investors to finance a specific project. This model creates the opportunity for low investment minimums, offering shares in multi-million dollar properties for as little as $25,000. With these low investment minimums, your SDIRA could even invest in multiple projects for increased diversification.
The project’s sponsor handles every detail on behalf of investors, from scouting locations to construction and ongoing tenant management. This keeps the SDIRA-required professional distance between you as the account holder and the asset; you won’t be at risk of disqualifying your account due to the IRS’s prohibited transactions (like using the property yourself or contributing your own sweat equity to the project).
Plus, experienced sponsors have systems and connections in place for cost-efficient management, which can result in greater return potential.
Invest in Multi-Family Real Estate Through Your IRA with Gatsby
Are you ready to boost your retirement portfolio with multi-family real estate investments? Gatsby Investment is excited to help you!
We proudly accept self-directed retirement accounts, including SDIRAs, as one of the three ways to invest with us.
Explore our syndicated multi-family investment opportunities and choose the project(s) you want to include in your SDIRA. We can work with your retirement account custodian to fund your investment(s) and provide you with the many benefits of investing in multi-family real estate through your Self-Directed IRA.
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