--- title: "Top 5 Mistakes: Rental Properties in an IRA (And How to Avoid Them)" description: There are a lot of moving parts to managing a rental property in a retirement account, making it easy to make simple mistakes. image: https://blog.preferredtrustcompany.com/hubfs/iStock-612736550.jpg --- [![Horizontal Logo-HighRes JPG cropped-2](https://blog.preferredtrustcompany.com/hs-fs/hubfs/Horizontal%20Logo-HighRes%20JPG%20cropped-2.jpg?width=234&height=66&name=Horizontal%20Logo-HighRes%20JPG%20cropped-2.jpg)](https://preferredtrustcompany.com/)   - Get Started - [Schedule Consultation](https://info.preferredtrustcompany.com/preferred-trust-company-consultation) - [Open an Account](https://preferredtrustcompany.com/self-directed-ira-applications/) - [About Preferred Trust](https://preferredtrustcompany.com/about-ira-custodian/) - [Client Testimonials](https://preferredtrustcompany.com/client-testimonials/) - SDIRA Resources - [Why Self-Direct?](https://preferredtrustcompany.com/why-self-directed-ira/) - 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[Investment Services](https://preferredtrustcompany.com/investment-services/) - Forms - [Forms](https://preferredtrustcompany.com/forms/) - [Fee Schedule](https://preferredtrustcompany.com/fee-schedule/) - [Pay Your Fees](https://preferredtrustcompany.com/shop/) - [Login](https://icp.infovisa.com/0234) # Top 5 Mistakes: Rental Properties in an IRA (And How to Avoid Them) December 01, 2020 [![Share on facebook](https://7528309.fs1.hubspotusercontent-na1.net/hub/7528309/hubfs/raw_assets/public/mV0_d-web-default-modules_hubspot/img/facebook-color.png?width=24&name=facebook-color.png)](http://www.facebook.com/share.php?u=https%3A%2F%2Fblog.preferredtrustcompany.com%2Fold%2Ftop-5-rental-property-investor-mistakes-in-an-ira-and-how-to-avoid-them%3Futm_medium%3Dsocial%26utm_source%3Dfacebook) [![Share on linkedin](https://7528302.fs1.hubspotusercontent-na1.net/hub/7528302/hubfs/raw_assets/public/mV0_d-web-default-modules_hubspot/img/linkedin-color.png?width=24&name=linkedin-color.png)](http://www.linkedin.com/shareArticle?mini=true&url=https%3A%2F%2Fblog.preferredtrustcompany.com%2Fold%2Ftop-5-rental-property-investor-mistakes-in-an-ira-and-how-to-avoid-them%3Futm_medium%3Dsocial%26utm_source%3Dlinkedin) [![Share on twitter](https://7528304.fs1.hubspotusercontent-na1.net/hub/7528304/hubfs/raw_assets/public/mV0_d-web-default-modules_hubspot/img/twitter-color.png?width=24&name=twitter-color.png)](https://twitter.com/intent/tweet?original_referer=https%3A%2F%2Fblog.preferredtrustcompany.com%2Fold%2Ftop-5-rental-property-investor-mistakes-in-an-ira-and-how-to-avoid-them%3Futm_medium%3Dsocial%26utm_source%3Dtwitter&url=https%3A%2F%2Fblog.preferredtrustcompany.com%2Fold%2Ftop-5-rental-property-investor-mistakes-in-an-ira-and-how-to-avoid-them%3Futm_medium%3Dsocial%26utm_source%3Dtwitter&source=tweetbutton&text=) There are a lot of moving parts to managing a rental property in a retirement account, making it easy to make simple mistakes. Unfortunately, those simple mistakes could have harmful consequences for your retirement savings. Here are the top 5 rental property investor mistakes and how to avoid them. **Mistake Number 1:** The investor pays their expenses out of pocket: All of the expenses such as repairs, utilities, property management fees, and mortgage payments for the property should be paid with the funds from your IRA account. We understand that there can be unexpected emergencies and you need to pay out of pocket to fix them fast. If this happens, you will need to fill-out the one-time expense form to reimburse yourself for the payment. Failure to comply with these rules could disqualify your retirement account. Avoid this mistake by directing Preferred Trust Company to make these payments with your IRA account with either a one-time Investment Expense Authorization Form or a Recurring Expense Authorization form. **Mistake Number 2:** The investor collects rental income through their personal bank account: Rental income should be paid directly to the IRA account. Collecting rental income outside of your IRA could disqualify your retirement account. Avoid this mistake by ensuring all payments are written for payment to your IRA account at Preferred Trust. **Mistake Number 3:** The investor failed to pay rental property taxes or HOA fees: Just like with your own home, property taxes and HOA fees are a mandatory payment for the property. Failure to make these payments will place a lien on your investment property which can create future complications. Avoid this mistake by finding out how often these payments are due and setting up a recurring payment by submitting an expense form with Preferred Trust. **Mistake Number 4:** The investor failed to cover the rental property with insurance: Your rental property must be covered by insurance, regardless of if it is residential or commercial. Do not bundle the insurance under your own personal policy. Avoid this mistake by making sure the insurance policy is under the vesting name for the IRA. **Mistake Number 5:** The investor allowed disqualified persons to work on or lease the property: Your tenants, property managers, inspectors, repairmen, contractors, anyone working on or leasing your property cannot be people that fall under the IRS list of disqualified persons. You and anyone with a linear relationship to you, such as your parents or your children, are considered disqualified persons. Failure to comply with this rule could disqualify your retirement account. Avoid this mistake by making sure you work with third parties for the upkeep and renting of your property. As you can see, it is important to regularly check-in with your investments to make sure everything is running smoothly, regardless of whether this is your first investment or your fifth. Continue learning more about the ins and outs of investing in a rental property with an IRA by reading our next blog, "[Lightning Round: Rules for Rental Property Investments](https://blog.preferredtrustcompany.com/blog/lightning-round-rules-for-rental-property-investments)" or by calling 888.990.7892 to talk to Preferred Trust Company today! #### Main Navigation - GET STARTED - [Schedule A Consultation](https://info.preferredtrustcompany.com/preferred-trust-consultation) - [Open An Account](https://preferredtrustcompany.com/self-directed-ira-applications/) - [About Preferred Trust](https://preferredtrustcompany.com/about-ira-custodian/) - [Client Testimonials](https://preferredtrustcompany.com/client-testimonials/) - SDIRA RESOURCES - [Why Self-Direct?](https://preferredtrustcompany.com/why-self-directed-ira/) - [Inherited IRAs](https://preferredtrustcompany.com/inherited_iras) - [Prohibited Transactions](https://preferredtrustcompany.com/prohibited_transactions/) - [IRA LLC](https://preferredtrustcompany.com/checkbook-ira-llc/) - [Frequently Asked Questions](https://preferredtrustcompany.com/faqs) - [Retirement Industry Glossary](https://preferredtrustcompany.com/retirement-industry-glossary/) - [Blog](https://blog.preferredtrustcompany.com/blog) - INVESTMENT COMMUNITY - [Company Partnership](https://preferredtrustcompany.com/company-partnership/) - [Investment Resources](https://preferredtrustcompany.com/resources-new/) - [Investment Services](https://preferredtrustcompany.com/investment-services/) - FORMS & FEES - [Forms](https://preferredtrustcompany.com/forms/) - [Fee Schedule](https://preferredtrustcompany.com/fee-schedule/) - [Online Payments](https://preferredtrustcompany.com/shop/) - [Client Portal Login](https://icp.infovisa.com/0234) #### Privacy & Terms - [Privacy Policy](https://preferredtrustcompany.com/privacy-policy/) - [Terms & Conditions](https://preferredtrustcompany.com/terms-conditions/) ![Daco\_5279469 (1)](https://blog.preferredtrustcompany.com/hs-fs/hubfs/Daco_5279469%20(1).webp?width=92&height=64&name=Daco_5279469%20(1).webp) ![RITA-Logo-White](https://blog.preferredtrustcompany.com/hs-fs/hubfs/RITA-Logo-White.webp?width=94&height=30&name=RITA-Logo-White.webp)     ©2023 Preferred Trust, LLC. 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PREFERRED TRUST, LLC “Preferred Trust” 6700 Via Austi Parkway, Suite 301, Las Vegas, NV 89119  888.990.7892 Financial Institutions Division of Nevada License No. TR10025. - - - - ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Stephanie", "url" : "https://blog.preferredtrustcompany.com/old/author/stephanie" }, "dateModified" : "2020-12-01T18:14:26.075Z", "datePublished" : "2020-12-01T18:14:26.000Z", "headline" : "Top 5 Mistakes: Rental Properties in an IRA (And How to Avoid Them)", "image" : [ "https://blog.preferredtrustcompany.com/hubfs/iStock-612736550.jpg" ], "mainEntityOfPage" : { "@id" : "https://blog.preferredtrustcompany.com/old/top-5-rental-property-investor-mistakes-in-an-ira-and-how-to-avoid-them", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://blog.preferredtrustcompany.com/hubfs/Horizontal%20Logo-HighRes%20JPG%20cropped-1.jpg" }, "name" : "Preferred Trust" } } ```