Those of us who have a Self-Directed IRA use it to make investments. This little known strategy allows the IRA to play the part a bank normally would in extending private notes to individuals or entities seeking to borrow money. This is how individuals like myself buy real estate consistently.
I have a host of private individuals that I have educated and have Self-Directed IRAs that they use to provide funding for my real estate deals. I call them Private Money Partners. Their investment is SECURED by the real estate that I buy. Does Wall Street provide security for your investments? NOT !!!
Private lending in a Self-Directed IRA allows them to earn income on the interest and terms of loans on a tax-free or tax-deferred basis. All payments from the borrowers like myself go straight into their IRA.
As the IRA owner, you call all the shots. You vet the borrowers and set the terms of the loan—the interest rate, down payment, and repayment window. You also determine if the loan is secured or unsecured. I always provide real estate as collateral for my Private Money Partners’ investments.
SECURED WITH COLLATERAL
Secured loans typically use real estate as collateral. However, the IRA can also use other assets like automobiles, private stock, and livestock as collateral. In case of default by the borrower, the IRA takes ownership of the property to recoup losses…which in my case would be real estate.
I honestly believe that some of my Private Money Partners go to bed some nights wishing that I would default. Why? Because they’d make a ton more money. Excuse my english…but that “ain’t” happening!
********************************* If you are reading my blog for the first time, let me inform you that… My company buys single-family houses and I write this blog weekly which is primarily directed to educate 1 group of individuals:
Individuals who are losing their shirt as a result of the “roller coaster” volatility of the stock market and low paying rate of other traditional investments, i.e. people that are looking for an opportunity that’ll provide a secured place to put their money to get it working for them to earn better than average returns.
However, often times, homeowners that need to sell their house, stop by to take a peek because they are curious and wondering how and/or where we get the funding to purchase houses. And if they stick around long enough, they begin to understand why individuals partner with us to provide the funding which empowers us to be able to purchase real estate on a continual basis. Simple, it’s because we teach them a secured way to earn better rates of return than they are currently earning.
So everybody wins. It’s a WIN-WIN-WIN !!!
Request your FREE Education Kit if you are interested in learning how passively investing in real estate may help place you in a better financial position.
Disclaimer: This site is intended for educational purposes only. I am not an accountant, attorney or licensed financial planner. While the information I’m writing here is based on many years of experience buying houses that doesn’t really constitute professional advice (since everyone’s experiences and situations are different).