There are many drawbacks:
1. Lot's of paperwork. You need to find a custody who allows a self directed IRA and a good trustee.
2. You can not manage the property yourself. You trustee has to do all the work including collecting rent, hiring a property manager or a contractor to do repair work etc. You have no control of the expense.
3. Most likley you can not take mortgage (it is unclear at this point though). Or you need to go LLP route and pool the money etc.
4. By the time you need to take Minimum Required Distribution, you need to sell the entire property, and all taxable at ordinary income level.
5. No depreciation deduction is allowed on you tax return!
With all these drawbacks, I wonder if it is even worth doing at all?
