While the real estate investment landscape is always changing, when it comes to generating rental income from an investment property, one principle remains constant year after year: ultimately, it all comes down to supply and demand. And that’s the core reason why many investors are purchasing condos for sale in Siesta Key Florida.
Demand for Siesta Key Condo Rentals is Strong
Indeed, as more people from around the world head to Siesta Key — and especially as more Americans opt for a “staycation” where they don’t have to deal with customs clearance, passport control, language barriers, and currency exchange — demand for rental condos in the area remains strong. This is especially the case with condos for sale in Siesta Key Florida that are located next to the Gulf of Mexico and the world famous #1 ranked Siesta Key beach.
Turning Rental Demand into Annual Income
If you are exploring ways to turn this rental demand into annual income, then one option that might be ideal is using your self-directed IRA. Here is how this works:
- You explore Siesta Key condos for sale, and choose a property that fits your investment portfolio, and is likely to be coveted and desirable by renters. Keep in mind that you do not need to focus on premium (i.e. $1 million+) properties. Many renters are looking for affordability and value, and not necessarily a penthouse suite with 4 bedrooms, private entrance, and so on.
- You purchase the property using the funds in your existing IRA or 401k. Since the property is owned by your self-directed IRA, the rental income that you generate is not taxed by the IRS. It grows tax free, just as it would if you had purchased mutual funds or T-bills, etc.
- Your self-directed IRA pays for all expenses and fees associated with the condo. In addition, since it is classified as an investment property and held in your IRA, you cannot live in it until you reach 59 and a half years of age. At that time, you can elect to take a percentage of ownership instead of cash distributions from your IRA. Once you have distributed 100%, you can use the condo as your primary home, or if you wish as your vacation home.
Patience is a Virtue – and Profitable
Naturally, this investment strategy requires patience, since as noted you cannot live in your condo until (at least) when you reach 59.5 years of age. However, if you are looking long-term, then this could indeed an ideal way to generate tax deferred rental income year after year, while you have an asset in your investment portfolio that is very likely to appreciate. After all, there is only one Siesta Key in the world!
To learn more about condos for sale in Siesta Key Florida that could be ideal for your investment portfolio, contact Marc Turgeon, GRI, Sales & Rental Manager, Gulf & Bay Club Realty LLC at (941) 349-3000.
Note: the above is provided for general information purposes. As a standard best practice, please consult with your financial planner and/or accountant to ensure that your personal and specific investment decisions are aligned with your objectives, and are in full compliance with prevailing IRS rules and regulations.